World Bank forecasts 17% drop in energy prices in 2026

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The World Bank’s latest Commodity Markets Outlook predicts a decline in global commodity prices to their lowest level in 2026, driven by faltering economic growth and ample oil supply. According to the report, global commodity prices are expected to tumble 12% in 2025 and an additional 5% in 2026, falling to levels not seen since 2020.

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The report noted that while the decline could moderate near-term inflation risks, it could also hamper prospects for economic progress in two out of every three developing economies. World Bank Group’s Chief Economist and Senior Vice President for Development Economics, Indermit Gill, said, “Higher commodity prices have been a boon for many developing economies, two-thirds of which are commodity exporters. But we are now seeing the highest price volatility in more than 50 years.”

Gill added that developing economies will need to take three steps to protect themselves: “Restore fiscal discipline; create a more business-friendly environment to attract private capital; liberalise trade wherever the opportunity exists.” The report projected that energy prices are expected to decrease by 17% this year, with Brent crude oil prices averaging $64 a barrel in 2025 and $60 in 2026

Meanwhile, the Major Energies Marketers Association of Nigeria’s (MEMAN) 2024 Nigeria Energy Downstream Industry Report noted that global oil demand is expected to increase steadily throughout 2024, reaching an average of 103.3 million barrels per day by the fourth quarter. However, crude oil supply from both OECD and non-OECD countries is expected to remain stable.

MEMAN highlighted that Nigeria’s reliance on imports for refined products, combined with global market dynamics, has contributed to increased fuel prices and volatility within the country’s petroleum supply chain. The report also noted a significant shift in fuel supply beginning in late 2024, as the Dangote Refinery began contributing to the local fuel market.

The World Bank report also highlighted the impact of commodity price volatility on developing economies, noting that it remains to be seen whether this marks the beginning of a more turbulent era for commodity markets. The confluence of trade tensions, conflicts, geopolitical risks, and frequent weather-related shocks makes it more likely.

Food prices are also expected to recede, falling by 7% in 2025 and an additional 1% in 2026. However, the United Nations estimates that acute food insecurity in some of the worst-hit areas globally will intensify this year, affecting 170 million people across 22 highly vulnerable economies

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