"Commodity Prices to Hit Six-Year Low in 2026 as Oil Glut Expands"

" Commodity Prices to Hit Six-Year Low in 2026 as Oil Glut Expands \r\nGlobal commodity prices are projected to fall to their lowest level in six years in 2026, marking the fourth consecutive year of decline, according to the World Bank Group\u2019s latest\u00a0 Commodity Markets Outlook . Prices are forecast to drop by 7% in both 2025 and 2026, driven by weak global economic growth, a growing oil surplus, and persistent policy uncertainty.\r\n\r\nFalling energy prices are helping to ease global inflation, while lower rice and wheat prices have helped make food more affordable in some developing countries. Despite the recent declines, however, commodity prices remain above pre-pandemic levels, with prices in 2025 and 2026 projected to be 23% and 14% higher, respectively, than in 2019.\r\n\r\n \u201cCommodity markets are helping to stabilize the global economy,\u201d\u00a0 said\u00a0 Indermit Gill ,\u00a0 the World Bank Group\u2019s Chief Economist and Senior Vice President for Development Economics . \u201cFalling energy prices have contributed to the decline in global consumer-price inflation. But this respite will not last. Governments should use it to get their fiscal house in order, make economies business-ready, and accelerate trade and investment.\u201d \r\n\r\nThe global oil glut has expanded significantly in 2025 and is expected to rise next year to 65% above the most recent high, in 2020. Oil demand is growing more slowly as demand for electric and hybrid vehicles grows and oil consumption stagnates in China.\u00a0Brent crude oil prices are forecast to fall from an average of $68 in 2025 to $60 in 2026\u2014a five-year low. Overall, energy prices are forecast to fall by 12% in 2025 and a further 10% in 2026.\r\n\r\nFood prices are also easing, with declines of 6.1% projected in 2025 and 0.3% in 2026. Soybean prices are falling in 2025 because of record production and trade tensions but are expected to stabilize over the next two years. Meanwhile, coffee and cocoa prices are forecast to fall in 2026 as supply conditions improve. However, fertilizer prices are projected to surge 21% in 2025, reflecting higher input costs and trade restrictions, before easing 5% in 2026. These increases are likely to further erode farmers\u2019 profit margins and raise concerns about future crop yields.\r\n\r\nPrecious metals have reached record highs in 2025, fueled by demand for safe-haven assets and continued central bank purchases. The price of gold\u2014widely viewed as a safe haven during times of economic uncertainty\u2014is expected to increase by 42% in 2025. It is projected to increase by a further 5% next year, leaving gold prices at nearly double their 2015-2019 average. Silver prices are also expected to hit a record annual average in 2025, rising by 34% and further 8% in 2026.\r\n\r\nCommodity prices could fall more than expected during the forecast horizon if global growth remains sluggish amid prolonged trade tensions and policy uncertainty.\u00a0Greater-than- expected oil output from OPEC+\u00a0could deepen the oil glut and exert additional downward pressure on energy prices. Electric-vehicle sales, which are expected to increase sharply by 2030, could further depress oil demand.\r\n\r\nConversely, geopolitical tensions and conflicts could push oil prices higher and boost demand for safe-haven commodities such as gold and silver. In the case of oil, the market impact of additional sanctions could also lift prices above the baseline forecast. Extreme weather from a stronger-than-expected La Ni\u00f1a\u00a0cycle could disrupt agricultural output and increase electricity demand for heating and cooling, adding further pressure to food and energy prices. Meanwhile, the rapid expansion of artificial intelligence (AI) and growing electricity demand to power data centers could raise prices for energy and for base metals like aluminum and copper, which are essential for AI infrastructure.\r\n\r\n \u201cLower oil prices provide a timely opportunity for developing economies to advance fiscal reforms that promote growth and job creation,\u201d said\u00a0 Ayhan Kose, the World Bank\u2019s Deputy Chief Economist and Director of the Prospects Group .\u00a0 \u201cPhasing out costly fuel subsidies can free up resources for infrastructure and human capital\u2014areas that create jobs and strengthen long-term productivity. Such reforms would help shift spending from consumption to investment, rebuilding fiscal space while supporting more durable job creation.\u201d \r\n\r\nThe report\u2019s\u00a0 special focus \u00a0section examines the history of international commodity agreements in the context of today\u2019s volatile commodity markets. It finds that while many past efforts\u2014such as inventory controls, production quotas, and trade restrictions\u2014helped stabilize prices for some commodities in the short term, few achieved lasting results. The most enduring international commodity agreement, the Organization of the Petroleum Exporting Countries (OPEC), has struggled to sustain market power especially when prices are high\u2014because higher prices tend to draw new competitors into the market. Instead of using price-control schemes, the report recommends that countries foster more diverse and efficient production, invest in technology and innovation, improve data transparency, and promote market-based pricing to build long-term resilience to price volatility.\r\n\r\n "

"Commodity Prices to Hit Six-Year Low in 2026 as Oil Glut Expands"

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