The World Bank predicts global commodity prices will fall sharply in 2025 and 2026.
Energy prices are expected to see the most significant decline.
The World Bank cites sputtering global growth, rising tariffs, and trade disruptions as the reasons for the decline.
It looks like the post-COVID commodity party is over – with the World Bank predicting a rather bleak end. In its latest report, the bank predicts that global commodity prices will plunge 12% in 2025 and another 5% in 2026, dragging them all the way back to their pre-pandemic levels.
The World Bank expects energy prices, specifically, to fall 17% to their lowest levels in five years, and then another 6% next year.
Blame it on sputtering global growth, rising tariffs, and the general messiness of international trade. Brent crude, the world’s mood ring for economic optimism, is expected to average just $64 a barrel this year, down from $81 in 2024. By 2026, oil could flirt with $60. Meanwhile, coal prices are set to nosedive 27% in 2025.
Falling commodity prices might actually be a good thing for inflation, especially when talking about energy. Rising energy costs added two percentage points to global inflation in 2022, which was then moderated by lower energy prices in 2023 and 2024, the World Bank report claimed.
But moderating inflation by lower commodity prices isn’t all roses. The World Bank has pointed out that two-thirds of developing countries rely on selling commodities to survive.
Now they’re facing the worst price volatility in half a century.
What’s the plan? According to the World Bank, it’s time for some old-fashioned economic reform: cut red tape, open the doors to private capital, and liberalize trade.
On the bright side, gold is still everyone’s favorite emotional support metal. Prices are expected to hit a record in 2025 as jittery investors clutch their safe haven.
By Julianne Geiger for Oilprice.com
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