World Bank Forecasts Sharp Decline in Global Commodity Prices as Oil Surplus Expands
Global commodity prices are projected to drop to their lowest levels in six years by 2026, extending a four-year slump, according to a new World Bank report released on Wednesday. The institution forecasts a 7% decline in both 2025 and 2026, citing weak global economic growth, persistent policy uncertainty, and an expanding oil surplus. Although prices remain above pre-pandemic levels, the World Bank said the downturn could reshape global trade and investment trends in the coming years.
Energy markets are leading the decline, with Brent crude prices expected to fall from an average of $68 per barrel in 2025 to $60 in 2026, their lowest point in five years. The Bank attributes this to slowing demand as electric and hybrid vehicle sales rise and consumption stagnates in major markets like China. Overall, energy prices are expected to fall by 12% in 2025 and by another 10% in 2026. “Falling energy prices have contributed to easing global inflation,” said Indermit Gill, the Bank’s Chief Economist. “But this respite will not last. Governments should use it to strengthen fiscal positions and prepare for renewed market volatility.”
Agricultural commodities are also seeing relief, with food prices projected to drop 6.1% in 2025 and 0.3% in 2026. Wheat and rice prices are improving affordability in developing nations, while record soybean harvests and easing trade tensions are helping stabilize markets. However, fertilizer costs — expected to surge 21% in 2025 before easing — could limit farmers’ profits and pressure global food supply chains.
Precious metals remain a bright spot amid the decline. Gold and silver prices have soared due to rising demand for safe-haven assets and continued central bank purchases. Gold is projected to rise 42% in 2025 and an additional 5% in 2026, while silver could jump 34% and 8%, respectively. Still, the World Bank cautions that commodity prices could fall further if global growth stays sluggish or OPEC+ production exceeds expectations, deepening the oil glut.
Ayhan Kose, the Bank’s Deputy Chief Economist, urged developing economies to seize the opportunity presented by lower oil prices. “Phasing out costly fuel subsidies can free resources for infrastructure and human capital,” he said. “Such reforms create jobs, strengthen long-term productivity, and rebuild fiscal resilience.” The Bank’s report concludes by emphasizing the need for policy reform and investment in innovation as the world adapts to shifting energy demand and evolving commodity markets.
source: punch