The World Bank has made an important prediction about the prices of different commodities, like oil, metals, and agricultural products. They believe that by 2025 and 2026, these prices will go down. This drop in prices is mostly due to the expected decrease in oil prices. Let’s break down what this means for everyone and how these changes are happening.

First, let’s understand what commodities are. Commodities are basic goods used in commerce that are interchangeable with other goods of the same type. This includes things like oil, metals, and food products. The prices of these commodities can change based on supply and demand, just like how the price of your favorite snack might go up when it’s hard to find it in stores.

According to the World Bank, oil prices are predicted to average around $80 per barrel in 2024. But don’t get too comfy! By 2025, they expect oil prices to drop to about $73, and then even lower to $72 in 2026. This decline is significant and will affect the prices of many other goods because oil is such a key part of the global economy.

Now, why is this happening? One major reason is that the demand for oil is slowing down, particularly from countries like China. When demand goes down, prices usually follow. Additionally, OPEC+, a group of oil-producing countries, is increasing its supply capacity, which means there will be more oil available in the market. More supply combined with less demand usually leads to lower prices.

In fact, the World Bank expects that commodity prices overall will fall by about 5% in 2025 and by another 2% in 2026. If you compare this to the 3% decline we’ve already seen this year, it shows that we are headed towards some of the lowest commodity prices since 2020. It’s like going to a sale where everything is cheaper than it’s been in years!

But it’s not just oil that’s affecting prices. The report mentions that while oil prices are dropping, prices for natural gas are actually going up. This can be a little confusing, but it highlights how different types of commodities can behave in different ways. Plus, while metals and agricultural commodities are expected to stay pretty stable, they might still see small price changes.

Let’s take a closer look at the metals market. The World Bank predicts that metal prices will remain mostly steady, but there could be a slight dip of about 3% in 2026. Base metals, like aluminum and copper, are in demand right now because of the ongoing transition to renewable energy. However, as global industrial growth stabilizes, prices may start to go down. This is like how the price of a new video game might drop once more people own it and it’s no longer a hot item.

On another note, gold prices have been rising this year. This is largely because of increased geopolitical risks, which are situations that can cause instability between countries. When people are worried about these risks, they tend to buy gold because it’s considered a safe investment. Central banks in emerging economies are also buying more gold, which helps keep its price high.

In agriculture, the situation is slightly different. Favorable weather conditions have led to better crop yields, meaning farmers are producing more food. As a result, agricultural commodity prices are also expected to go down. This is good news for people in places where food prices have been high. Lower prices can help families afford food more easily.

But what about the future? The World Bank’s report suggests that while prices are expected to drop, there are still some risks involved. For example, if there’s a significant increase in economic activity in countries like China, or if there are adverse weather conditions caused by climate change, prices might start to rise again. It’s a delicate balance, and many factors can affect it.

Another important thing to consider is the impact of OPEC+. If they decide to reduce production cuts, this could lead to even more oil being available. Along with countries like the United States and Brazil increasing their output, this means supply could remain high. More supply usually keeps prices lower.

In conclusion, the World Bank is predicting a drop in commodity prices through 2026, mainly driven by decreasing oil prices. While this may lead to lower prices for various goods, there are still uncertainties that could influence these predictions. The economy is like a big, complicated machine, with each part affecting the others.