Global commodity prices are projected to sink to their lowest level in six years in 2026, dragged down by a deepening oil glut, weak demand from China and sluggish global growth, the World Bank said in its latest Commodity Markets Outlook.
The report forecasts prices will fall by about 7 per cent in both 2025 and 2026, marking the fourth consecutive year of decline. The drop is expected to bring some relief to consumers through cheaper fuel and food, but it could strain the budgets of commodity-exporting nations and erode farmers’ profits.
“Commodity markets are helping to stabilise the global economy,” said Indermit Gill, the World Bank’s Chief Economist. “Falling energy prices have contributed to the decline in global inflation. But this respite will not last.”
Energy prices are leading the slide, with Brent crude expected to average $68 per barrel in 2025 and $60 in 2026, down from $81 last year – a five-year low. The Bank said the global oil surplus has surged and is now 65 per cent above its last peak in 2020, driven by rising output from OPEC+ members and non-OPEC producers such as the United States.
Demand for oil is slowing as China’s consumption stagnates and electric vehicle sales climb. The World Bank expects energy prices overall to fall 12 per cent in 2025 and another 10 per cent in 2026.
Natural gas markets will see mixed trends. Prices are projected to rise 11 per cent in the United States in 2026 but fall in Europe and Japan as supply expands.
Food prices are also moderating, with grains, rice and wheat easing amid strong harvests and better supply conditions. The Bank expects global food prices to fall 6.1 per cent in 2025 and stay almost flat the following year.
However, rising fertiliser costs could squeeze farmers’ margins. Prices are forecast to jump 21 per cent this year before easing slightly in 2026, reflecting high input costs, trade restrictions and export curbs in major producing countries such as China and Belarus.
While most commodities are weakening, investors are piling into precious metals. Gold prices are projected to rise 42 per cent in 2025 and a further 5 per cent in 2026, reaching nearly double their pre-pandemic average. Silver is also expected to hit record highs, buoyed by safe-haven demand and its use in renewable energy technology.
The Bank attributed the surge to central bank purchases and geopolitical uncertainty, including conflicts and sanctions that have boosted demand for defensive assets.
Falling energy and food prices are expected to help cool inflation globally, trimming around 0.2 percentage points from headline inflation in 2026. The World Bank said the downturn in oil prices offers an opportunity for governments in developing economies to reform fuel subsidies and redirect funds toward health, education and infrastructure.
Still, the report warned that the outlook is fragile. A sharper-than-expected global slowdown, continued policy uncertainty or a further rise in oil supply could push prices even lower. Conversely, new conflicts, sanctions or severe weather linked to La Niña could trigger fresh price spikes.
“Lower oil prices provide a timely opportunity for developing economies to advance fiscal reforms that promote growth and job creation,” said Ayhan Kose, the Bank’s Deputy Chief Economist.
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