Commodity prices to drop through 2026 amid stabilising supply and demand shifts: World Bank Group

commodity prices in international markets will decrease by 5  per cent in 2025 and 2  per cent in 2026, following a 3  per cent decline this year, reaching ir lowest levels since 2020, World Bank Group said in its October edition of Commodity Market Outlook.

A decline in oil prices will support downward trend of commodity prices, while increases in natural gas prices and stable outlooks for metals and agricultural commodities will temper overall decline, global entity said.

It added that Brent crude oil prices are expected to aver $80 per barrel in 2024 before dropping to $73 in 2025 and $72 in 2026.

report adds that annual aver oil prices are expected to decline for four consecutive years through to 2026, from ir 2022 high and it will settle slightly above ir 2021 level.

projected price drop reflects a combination of factors, including slower global oil demand--especially from China--diversified oil production and increased supply capacity within OPEC+.

However, it highlighted that possibility of escalating war in Middle East will be a short-term risk that could push prices higher and impact or commodity markets.

As per report, energy sector affects price conditions in short term, and global energy markets will be closely reacting to geopolitical tensions.

In October 2023 and April 2024, oil prices surged to above $90 per barrel following regional conflicts. Although se spikes were often temporary, y stabilised as supply concerns eased.

In metals markets, outlook remains relatively stable. " metals price index is projected to drift slightly lower over 2025-26. After rising 6  per cent this year (y/y), base metal prices are forecast to hold steady next year before softening by 3  per cent in 2026," report added.

Base metals such as aluminium and copper have seen resilience in ir prices due to a robust demand from ongoing energy transition, though prices will see downward adjustments after stability in global industrial growth.

Meanwhile, gold prices have risen significantly throughout 2024, fuelled by heightened geopolitical risks and strong demand from central banks in emerging ecomies.

agriculture commodity prices have seen declines after many regions witnessed favourable wear, which supported robust crop yields. Food prices overall are expected to ease furr, which could help improve affordability in emerging markets, report added.

In outlook, it said that commodity prices may see both upside and downside risks. Rising global ecomic stimulus, especially from China and adverse wear conditions due to climate change could raise prices, while a weakening in global industrial activity could temper demand. With organisation of Petroleum Exporting Countries Plus (OPEC+) potentially unwinding production cuts and n- OPEC oil producers like United States and Brazil ramping up output, supply conditions may remain ample, keeping commodity prices in check through 2026.