The World Bank has forecast a significant decline in global commodity prices, projecting Brent crude oil to average $73 per barrel in 2025 amid an anticipated oil glut. This glut is expected to diminish the impact of potential conflicts in the Middle East on commodity prices.
In its latest report, titled “World Bank 2024 Commodity Markets Outlook” released over the weekend, the World Bank indicated that global commodity prices could hit a five-year low, decreasing by 5% in 2025 and 2% in 2026.
The report outlines that Brent oil prices are expected to average $80 per barrel in 2024—about $3 lower than the previous year—with projections suggesting prices will stabilize around $75 for the remainder of 2024 before dropping to $73 in 2025 and $72 in 2026. These estimates hinge on the assumption that there will be no prolonged escalations in ongoing conflicts, a slowdown in oil demand growth, and a well-supplied oil market.
The anticipated oil glut is attributed to a notable shift in China, where oil demand has stagnated since 2023 due to a slowdown in industrial production and a rise in electric vehicle and Liquefied Natural Gas (LNG) truck sales. Additionally, several non-OPEC countries are expected to increase their oil production.
The report cautions that if tensions in the Middle East escalate and lead to a reduction in global oil supply by 2% (approximately 2 million barrels per day), Brent prices could initially surge to a peak of $92 per barrel. However, unaffected oil producers would likely respond by increasing production, resulting in a relatively brief price spike, with an average projected price of $84 per barrel in 2025—15% higher than the baseline forecast but only 5% above the average for 2024.
Further projections indicate that global oil supply is expected to rise from about 102.3 million barrels per day (mb/d) in 2023 to approximately 103 mb/d in 2024, and reach around 105 mb/d in 2025. Most of this growth is anticipated to come from the United States, which is expected to add about 0.6 mb/d in both 2024 and 2025. Supply increases are also projected from Brazil, Canada, and Guyana, contributing an additional 0.5 mb/d.
The report suggests that oil consumption will rise by about 0.9 mb/d in both 2024 and 2025, a marked slowdown compared to the 2 mb/d increase seen in 2023 as China lifted pandemic-related restrictions.
Indermit Gill, Chief Economist and Senior Vice President of the World Bank Group, noted that while falling commodity prices and improved supply conditions can buffer against geopolitical shocks, they will do little to alleviate the high food prices affecting developing countries, where food-price inflation is significantly higher than in advanced economies.
Ayhan Kose, Deputy Chief Economist and Director of the Prospects Group, emphasized that the global economy is better positioned to handle a major oil shock than before, presenting unique opportunities for policymakers in developing nations. He suggested that declining commodity prices could complement monetary policy aimed at reducing inflation and provide a window to phase out costly fossil fuel subsidies.
