The World Bank has projected that global commodity prices are may fall to lowest levels of the 2020s by 2026 based on the twin challenge of slowing economic growth and surging oil supply to the global market.
The Bretton Woods institution in its latest Commodity Markets Outlook report specifically predicted that the commodity prices may drop by 12% this year and further down by 5% in 2026.
According to the bank, in real terms, adjusted for inflation, the commodity prices will likely dip below the average recorded between 2015 and 2019, thereby ending a post-pandemic boom that was exacerbated by Russia’s invasion of Ukraine in 2022.
The bank pointed out that while the drop may help ease inflationary pressures caused by rising trade barriers, it could also stall growth in two-thirds of developing economies, many of which rely heavily on commodity exports.
Commenting on the report, Chief Economist at the World Bank Group, Indermit Gill, said: “We’re now seeing the highest price volatility in over 50 years. The combination of high volatility and falling prices spells trouble.”
To mitigate the impact of the drop in commodity prices on developing countries like Nigeria, Gill advised the governments on three urgent steps, namely restoration of fiscal discipline, improvement in the business environment to attract private capital, and trade liberalisation trade where feasible.
The World Bank noted that energy prices, which helped stoke global inflation in 2022, had been steadily falling since 2023, and that trend is expected to accelerate.
Specifically, it projected that Brent crude oil will average $64 per barrel in 2025 (down from $81 in 2024), falling further to $60 in 2026 while Coal prices are also expected to plunge 27% this year and another 5% in 2026, attributing the slide in the prices to a growing mismatch between supply and demand.
On the supply side, the development finance institution predicted that global oil supply would outstrip demand by 0.7 million barrels per day in 2025, partly due to the rapid adoption of electric vehicles globally.
