World Bank: Oil Prices Will Hit a Five-Year Low by 2025, While Gold Will Maintain Its Price

The World Bank’s Commodity Markets Outlook report highlights key projections for the global commodities market in the coming years.

Among the most significant forecasts is the expected surplus of global oil supply, which is anticipated to outpace demand by an average of 1.2 million barrels per day in 2024. This surplus is only expected to be surpassed twice: during the pandemic lockdowns in 2020 and during the oil price collapse in 1998.

The excess supply reflects several factors, including a shift in China, where oil demand has stagnated since 2023 due to a slowdown in industrial production and the growing popularity of electric vehicles and natural gas-powered trucks. Additionally, non-OPEC+ countries are expected to increase their oil production, and OPEC+ itself holds significant spare capacity, amounting to 7 million barrels per day, almost double the levels seen in 2019 before the pandemic.

The World Bank also forecasts a sharp drop in global commodity prices, with a projected 10% decrease from 2024 to 2026. Energy prices are expected to decline by 6% in 2025 and another 2% in 2026. This drop in energy and food prices could help central banks control inflation. However, geopolitical tensions could complicate these efforts, as conflicts may disrupt energy supplies and drive up food and energy prices.

Regarding gold, the report predicts that the precious metal will continue to be a popular investment choice for those seeking a “safe haven” during times of uncertainty. Gold prices are expected to rise by 21% above the 2023 average, with the price expected to remain around 80% higher than the pre-pandemic five-year average in the coming two years. Despite potential fluctuations, gold’s value is likely to remain strong, particularly amid geopolitical instability and regulatory uncertainties.

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Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

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