Commodity prices are expected to decrease by 5 percent in 2025 and 2 percent in 2026. 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 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, diversifying oil production, and ample oil supply capacity—suggest sizable downside risks to oil prices, especially if OPEC+ unwinds its latest production cuts. There are also dual 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. Following several overlapping global shocks in the early 2020s, which drove parallel swings in commodity prices, commodity markets appear to be departing from a period of tight synchronization. A Special Focus analyzes commodity price synchronization over time and considers the relative importance across commodity cycles of a wide range of demand and supply shocks, including global demand shocks and shocks specific to different commodity markets. It concludes that, while supply shocks were the dominant commodity price driver in the early 2000s and around the global financial crisis, post-pandemic price movements have been more substantially shaped by commodity-specific shocks, such as those related to conflicts.
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- Commodity Markets Outlook Website
- Citation
- “ World Bank . 2024 . Commodity Markets Outlook, October 2024 . © Washington, DC: World Bank . http://hdl.handle.net/10986/42219 License: CC BY 3.0 IGO . ”
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- Global Economic Prospects
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- https://doi.org/10.1596/42219
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- 13
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- CC BY 3.0 IGO
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- World Bank
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- http://creativecommons.org/licenses/by/3.0/igo
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- Prospects Group
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- https://hdl.handle.net/10986/42219
- date disclosure
- 2024-10-29
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Table of Contents
- Introduction 3
- Methodology and data 5
- Global demand shocks 5
- Global supply shocks 5
- Commodity-specific shocks 5
- Synchronized commodity price cycles 6
- Evolution of synchronized commodity prices. 6
- Synchronization in commodity prices across commodity groups. 6
- Synchronization in commodity prices over time. 6
- Drivers of synchronized commodity price cycles 8
- Drivers of synchronized commodity price cycles during recessions and re- coveries 9
- Covid Recession and Recovery. 10
- Russian invasion of Ukraine. 10
- Global growth slowdown. 10
- Conflict in the Middle East. 10
- Conclusion 11
- References 11
- Journal of Monetary Econom- ics 11
- Commodity Markets Evolution Challenges and Policies 12
- American Economic Review 12
- Brookings 12
- Journal of Monetary Economics 12
- Journal of Develop- ment Economics 12
- European Review of Agricultural Economics 12
- American Economic Journal Macroeconomics 12
- Brookings Papers on Economic Activity 12
- Journal of Applied Econometrics 12
- IMF Staff Papers 12
- Macroeco- nomic Dynamics 12
- World Development 12
- Journal of Economic Literature 12
- Inflation in Emerging and Developing Economies Evolution Drivers and Policies 12
- Energy Economics 12
- Econbrowser 12
- Energy Economics 13
- Journal of Applied Econo- metrics 13
- American Economic Review 13
- Journal of International Economics 13
- Journal of Economic Dynamics and Control 13
- Applied Economics 13
- Commodity Markets Outlook 13
- Commodity Markets Outlook Resource Development in an Era of Cheap Commod- ities 13
- Commodities Market Out- look 13
- Commodity Markets Outlook 13
- Global Economic Prospects 13
- Commodity Markets Outlook The Impact of the War in Ukraine on Commodity Markets 13
- Commodity Markets Outlook Pandemic War Recession Drivers of Aluminum and Copper Prices 13
- Commodity Markets Outlook Under the Shadow of Geopolitical Risks 13
