World Bank Tokyo Online Morning Seminar #201 “Commodity Markets Outlook, October 2024 Edition”

Global commodity prices are set to tumble to a five-year low in 2025 amid an oil glut that is so large that it is likely to limit the price effects even of a wider conflict in the Middle East, according to the World Bank’s latest Commodity Markets Outlook, issued on October 29, 2024. Even so, overall commodity prices will remain 30% higher than they were in the five years before the COVID-19 pandemic.

Next year, the global oil supply is expected to exceed demand by an average of 1.2 million barrels per day, a glut that has been exceeded only twice before—during the pandemic-related shutdowns in 2020 and the 1998 oil-price collapse. The new oversupply partly reflects a major shift in China, where oil demand has essentially flatlined since 2023 amid a slowdown in industrial production and an increase in sales of electric vehicles and trucks powered by liquefied natural gas (LNG). In addition, several countries that are not part of the Organization of Petroleum Exporting Countries or its allies (OPEC+) are expected to ramp up oil production. OPEC+ itself maintains significant spare capacity, amounting to 7 million barrels per day, almost double the amount on the eve of the pandemic in 2019.

From 2024 through 2026, global commodity prices are projected to plummet by nearly 10%. Global food prices are set to fall 9% this year and an additional 4% in 2025 before leveling off. That would still leave food prices nearly 25% above the average level from 2015 through 2019. Energy prices are expected to drop by 6% in 2025 and an additional 2% in 2026. Falling food and energy prices should make it easier for central banks to control inflation. However, an escalation in armed conflicts could complicate that effort by disrupting energy supply and driving up food and energy prices.

At this online seminar, Paolo Angolucci, Senior Energy Economist, Dawit Mekonnen, Senior Economist, and Phillipe Kenworthy, Senior Economist, Prospects Group, shared the main findings of the report.