Informist, Tuesday, Apr. 29, 2025

NEW DELHI – Brent crude oil prices are likely to fall to an average $64 per barrel in 2025 from $81 a barrel in 2024 on concerns of a slowdown in global economic growth due to rising trade tensions and increased policy uncertainty, the World Bank said Tuesday in its Commodity Markets Outlook report. The report forecasts Brent crude oil prices to fall further to $60 a barrel in 2026.

The forecast reflects a long-term slowdown in global oil demand, on the back of rapid adoption of electric vehicles. According to the report, "in China, the world's largest automobile market, more than 40% of new cars purchased last year were either battery-powered or hybrid vehicles". This, the authors of the report said, is close to three times the share in 2021. "In 2025, the global oil supply is expected to exceed demand by 0.7 million barrels per day," they said.

Overall, energy prices are expected to decrease by 17% this year, to the lowest level in five years, before dropping a further 6% in 2026. "Global commodity prices have been falling since 2023, helping to tamp down overall inflation across the world," according to the report. "Surging energy prices added more than two percentage points to global inflation in 2022. In 2023 and 2024, however, declining energy prices helped lower inflation. That trend of falling energy prices is set to intensify this year, potentially mitigating some of the price effects of higher tariffs in major economies." The US and China are currently engaged in a tariff war, while the US has kept tariffs against nearly 70 other countries on hold for 90 days.

Coal prices are expected to drop by 27% this year and an additional 5% in 2026, as the growth of coal consumption for power generation in developing economies slows, according to the report.

The Commodity Markets Outlook expects prices of European natural gas to rise by 6% in 2025, before falling 9% in 2026. "US natural gas prices are set to climb sharply in 2025 and edge up further in 2026, with expanding exports supporting prices," as per the report.

While prices may slump further if global oil and coal production rise, the report also suggested that the downside may be limited by rising geopolitical tensions, increased demand for liquefied natural gas and coal, and supply issues caused by extreme weather events. End

Reported by Pallavi Singhal

Edited by Rajeev Pai

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