Commodity prices will remain at historically high levels until the end of 2024 as a result of the war in Ukraine that has caused a major shock to global markets, according to the World Bank’s latest Commodity Market Outlook report.
The study details that energy prices in the last two years have been the highest since the 1973 oil crisis. While price increases for food staples, of which Russia and Ukraine are major producers, and fertilizers, which rely on natural gas as a production input, have been the largest since 2008.
In this sense, the World Bank report foresees that energy prices increase by more than 50% in 2022 before falling in 2023 and 2024. Meanwhile, he estimates that non-energy prices, including those for agriculture and metals, rise by almost 20% in 2022 to moderate in the coming years.
However, it projects commodity prices will remain well above the average of the last five years. In the event of a protracted war or additional sanctions on Russia, prices could be even higher and more volatile than currently projected.
The price of raw materials
Due to war-related disruptions in production and trade, the World Bank expects the price of Brent crude oil will reach an average of US$ 100 per barrel in 2022its highest level since 2013 and an increase of more than 40% compared to 2021. However, it estimates that prices will moderate to US$92 in 2023, well above the five-year average of US$60 per barrel. .
As for the price of European natural gas, the study predicts that it will be double in 2022 than in 2021, while the value of coal will be 80% higher in this period.
As far as wheat is concerned, it is expected to become more expensive by more than 40%, reaching an all-time high in nominal terms this year. “That will put pressure on developing economies that depend on wheat imports, especially Russia and Ukraine,” says the financial institution.
Finally, metal prices are forecast to rise 16% in 2022 before tapering off in 2023, but will remain elevated.