Geopolitical tensions keep prices high

Energy and food prices are expected to drop, yet they will still be 40 % and 30 % higher than their 2015-2019 averages.

Base metal prices will see a slight increase, averaging over 40 % higher than their 2015-2019 levels. This reflects a new trend where global growth diverges from the cost of essential commodities.

Four main factors drive this trend. First, production cuts by OPEC and its allies have tightened global oil supply since early 2023. Second, despite an economic slowdown, China’s demand for raw materials remains strong. Third, climate change boosts demand for metals while disrupting agricultural production. Lastly, geopolitical tensions have kept prices high and volatile.

These geopolitical tensions continue to threaten commodity prices and global growth prospects, raising the risk of new supply shocks. However, higher prices allow commodity-exporting countries to grow faster.