Executive Summary:
Commodity prices are expected to decrease by 5 percent in 2025 and 2 percent in 2026, after softening 3 percent this year. This would lead aggregate commodity prices to their lowest levels since 2020. The projected declines are led by oil prices but tempered by price increases for natural gas and a stable outlook for metals and agricultural raw materials. The Brent crude oil price is projected to average $80/bbl in 2024, before slipping to $73/bbl in 2025 and $72/bbl in 2026. Thus, from their 2022 high, annual average oil prices are expected to decline for four consecutive years through to 2026, settling just slightly above their 2021 level. The possibility of escalating conflict in the Middle East represents a substantial near-term upside risk to energy prices, with potential knock-on consequences for other commodities. However, over the forecast horizon, longer-term dynamics—including decelerating global oil demand, notably in China; diversifying oil production; and ample oil supply capacity held by OPEC+—suggest sizable downside risks to oil prices, especially if OPEC+ unwinds its latest production cuts. There are also two-sided risks to industrial commodity demand stemming from economic activity. On the one hand, concerted stimulus in China and above-trend growth in the United States could push commodity prices higher. On the other, weaker-than-anticipated global industrial activity could dampen them.
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Compliments of the World BankThe post World Bank | October 2024 Commodity Markets Outlook first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.
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