Commodity Prices Expected to Fall to Six-Year Low in 2026
Pressures on Inflation Ease, but Geopolitical Tensions Cloud Outlook
The World Bank forecasts that oil prices will continue to decline in 2026 due to oversupply. In its latest report published in late October 2025, the World Bank explains that oil prices, which reached $120 in 2022 - the highest level during the war in Ukraine - fell back to around $80 in 2023 and 2024, before dropping below $70 by the end of 2025. Prices are expected to fall again in 2026, approaching $60 per barrel.
This decline in oil prices is attributed to its abundance, according to the World Bank. The surplus "has increased significantly in 2025 and is expected to continue to grow next year, reaching a level 65% higher than the peak in 2020," the report states.
The International Energy Agency predicts "a surplus of 4 million barrels per day in 2026, 1.6 million barrels per day more than the surplus observed in 2020, at the height of the pandemic," adds the World Bank.
Several factors contribute to the excess production. In China, for example, oil demand has slowed due to efforts to make its economy more "green" and renew its automotive fleet. "The growing popularity of hybrid cars worldwide is also contributing to reducing dependence on traditional oil, thus promoting energy transition."
For the global economy, it faces a period of uncertainty, particularly due to tariffs imposed by the US administration. Additionally, the Organization of the Petroleum Exporting Countries (OPEC+) "has boosted production to regain lost market share, which has an economic impact."
Uncertainties Persist
The World Bank announces that managing the surplus is possible, but several uncertainties persist. The bank's estimates are based on the assumption that geopolitical tensions will not intensify. However, a conflict between major powers, such as Russia and Ukraine or in the Middle East, could disrupt the oil price situation.
The report also shows that global commodity prices are expected to continue their decline for the fourth consecutive year, falling to their lowest level in six years in 2026. Prices are expected to drop by 7% in 2025 and 2026, due to sluggish global economic growth and persistent political uncertainty.
"The decline in energy prices is contributing to easing global inflation, while the decline in rice and wheat prices is making basic food staples more affordable in many developing countries." Despite recent declines, commodity prices remain higher than their pre-pandemic levels, up 23% in 2025 compared to 2019 and 14% in 2026.
According to Indermit Gill, the World Bank's Chief Economist and Vice President for Development Economics, "commodity markets are helping to stabilize the global economy. The significant decline in energy prices has helped reduce global consumer price inflation.
This respite will not last, and governments should take advantage of the current situation to restore order to public finances, improve the business environment, and accelerate trade and investment."
Food prices are also expected to decrease, with projected declines of 6.1% in 2025 and 0.3% in 2026. Soybean prices are declining in 2025 due to record production and trade tensions, but are expected to stabilize over the next two years, the World Bank indicates.
Coffee and cocoa prices are expected to fall in 2026 due to increased supply. Fertilizer prices, on the other hand, are expected to surge 21% in 2025 due to rising input costs and trade restrictions, before declining 5% in 2026. "The increase in fertilizer prices is likely to further erode farmers' profit margins and raises concerns about future agricultural yields."
Budget Reforms in Sight
According to Ayhan Kose, the World Bank's Deputy Chief Economist and Director of the Prospects Group, the decline in oil prices "offers developing economies the opportunity to advance budget reforms that promote growth and job creation."
Thus, the gradual elimination of costly fuel subsidies can free up resources for infrastructure development and human capital, areas that create jobs and strengthen long-term productivity, he explains. "Such reforms would help redirect consumption spending towards investment, allowing for the rebuilding of fiscal buffers," adds the Chief Economist.
Impact on African Countries
For African economies, which are heavily dependent on resource exports, the projections reveal structural vulnerabilities but also opportunities for reform. In its report, the World Bank paints a contrasting picture for African commodities.
In energy, Brent crude is expected to plummet to $60 per barrel in 2026 (compared to $81 per barrel in 2024 or around $68 per barrel in 2025), weighed down by a global supply surplus (+65% compared to 2020) and sluggish demand. This decline is expected to heavily impact oil-dependent economies like Nigeria, Angola, and Algeria, which rely on export revenues.
