The Commodity Markets Outlook in eight charts

Commodity prices are set to remain elevated, with the global index projected to rise 23 percent in 2026 before declining 7 percent in 2027. Global commodity prices are projected to increase 23 percent in 2025 before retreating 7 percent in 2027. The outlook hinges on continued supply disruptions, particularly in energy and fertilizer markets, whose price indexes are expected to rise 32 and 14 percent, respectively, in 2026 before easing in 2027. Food prices are projected to increase 10 percent in 2026 amid an intensified El Niño, disruptions to Black Sea grain supplies, higher input costs, and increased diversion to biofuels, especially biodiesel. Metals and minerals prices are expected to rise 28 percent in 2026, reflecting strong demand and limited supply growth, while precious metals prices are projected to increase nearly 40 percent. Risks are tilted to the upside and include prolonged hostilities in the Middle East, stronger-than-expected effects from El Niño, and extended disruptions to Black Sea supplies. Commodity markets were highly volatile for much of 2026 amid geopolitical tensions in the Middle East and, more recently, disruptions to Black Sea grain supplies. Energy prices were hit particularly hard: Brent crude exceeded $110/bbl in mid-October as hostilities in the Strait of Hormuz constrained supply flows, while refinery damage pushed up prices for petroleum products, particularly for diesel. Reduced Middle East exports also intensified competition for LNG, lifting natural gas prices in Asia and Europe. Meanwhile, a very strong El Niño and elevated input costs added pressure to food markets, with the World Bank Group’s food price index reaching a three-year high in September. Metals and minerals prices remained elevated as well reflecting strong industrial demand, tight supplies, and limited near-term supply growth. Oil prices have been exceptionally volatile in 2026Q3, amid renewed hostilities in the Gulf and Red Sea, an attack on Saudi Arabia’s East-West Pipeline, and intensifying attacks on Russian oil facilities. In mid-October, front-month Brent futures exceeded $110/bbl, even as markets weighed rising crude supply and accelerated releases from IEA emergency stockpiles. Brent is expected to average $91/bbl in 2026 before declining to $79/bbl in 2027 and $70/bbl in 2028 as the market moves into surplus. Near-term risks remain tilted to the upside, particularly from conflict-related supply losses and tighter OPEC+ production policy amid depleted inventories. Further out, downside risks dominate, including a faster restoration of Gulf supply, stronger-than-expected non-OPEC+ output, weaker global growth, and a more rapid shift to electric vehicles. Natural gas prices surged in 2026Q3, with the World Bank Groups natural gas index reaching a four-year high in September. European and Asian LNG prices more than doubled from pre-conflict levels by September, amid prolonged Gulf supply disruptions, stronger Asian power-sector demand, and low European inventories. By contrast, U.S. natural gas prices generally remained below their February levels. Global gas markets are expected to remain tight, despite a partial recovery in Gulf LNG exports in 2027Q1 as shipments through the Strait of Hormuz rebound and damaged Emirati capacity is restored. With Qatar’s damaged LNG trains assumed to remain offline, however, regional exports are expected to stay below pre-conflict levels. European prices are projected to rise about 60 percent in 2026 before declining 8 percent in 2027 and almost 30 percent in 2028 as markets normalize. U.S. prices, meanwhile, are expected to remain broadly unchanged in 2026 before rising about 6 percent in 2027 and 5 percent in 2028, largely reflecting growing external demand for LNG. The World Bank Group’s agricultural price index rose 5 percent in 2026Q3 (q/q), driven by a surge in food prices. The index is projected to rise slightly in 2026 and 5 percent in 2027. Food prices, however, are expected to increase 10 percent in 2026 and a further 7 percent in 2027, following a 21 percent decline between 2022 and 2025. The increases reflect elevated input costs, disruptions to Black Sea grain and oilseed shipments, and harvest losses associated with a very strong El Niño. Rice production is expected to fall for the first time in a decade, while palm oil production in Southeast Asia is also expected to be constrained. Trade disruptions and hot, dry conditions in the European Union and elsewhere are expected to push wheat prices sharply higher. In contrast, beverage prices are projected to fall 24 percent in 2026 as coffee and cocoa production recovers, before rising 3 percent in 2027. The outlook assumes that Black Sea shipping disruptions ease and agricultural input costs decline in 2027. Risks are tilted to the upside: intensified conflict and larger-than-expected weather losses could push food and grain prices 12 percent and 20 percent above the 2027 baseline, respectively, while additional export restrictions or policies favoring biofuels could add further pressure. The World Bank Group’s fertilizer price index fell 22 percent in 2026Q3 (q/q) and declined further in October, fully reversing the 2026Q2 surge following the closure of the Strait of Hormuz. Urea prices drove both swings, while other fertilizer prices rose less sharply but remained elevated. Despite the recent retreat, the index is projected to rise about 14 percent in 2026 (y/y), reflecting Middle East shipping disruptions, higher input costs, and trade restrictions. Following a projected 14 percent increase in 2026, prices are expected to fall 12 percent in 2027 and 8 percent in 2028 as input costs ease and supplies recover, aided by increased exports from outside the Gulf region. Risks remain tilted to the upside, particularly from renewed shipping disruptions and higher input costs. The World Bank Group’s metals and minerals price index is on track to rise 25 percent in 2026, reaching a record annual average amid resilient demand and supply constraints for several base metals. Prices are expected to edge lower in 2027 but remain historically high, with the index still 16 percent above its 2021 peak. Demand is expected to remain firm, supported by investment in electrification, renewable energy, and data centers, while weak construction in many economies and softness in China’s steel sector weigh on iron ore. The precious metals price index fell 7 percent in 2026Q3 after reaching record highs earlier in the year but is still expected to rise 40 percent in 2026, before declining 8 percent in 2027 as investor demand moderates. Risks are two-sided: supply disruptions, stockpiling, and stronger global investment could push metal prices higher, while weaker global growth could weigh sharply on prices. For precious metals, geopolitical tensions and financial volatility pose upside risks, while higher-for-longer interest rates or a stronger U.S. dollar could push prices lower. Precious metal prices eased in 2026Q3, partially reversing a historic surge that had pushed gold, silver, and platinum to record highs. The retreat partly reflected rising bond yields, tighter monetary policy, and a stronger U.S. dollar. Safe-haven demand and central bank gold purchases are expected to moderate but remain supportive of elevated gold prices, while silver and platinum prices are likely to ease as demand growth slows and supply improves. Overall, the World Bank Group’s precious metals price index is projected to rise 40 percent in 2026 before falling 8 percent in 2027 and 6 percent in 2028. What does this mean for developing countries? Elevated food and energy prices, amid overlapping risks, have important implications for food price inflation and food insecurity. In response, policymakers often turn to trade restrictions, particularly export bans. While such measures may appear attractive domestically, they can fragment markets and push global prices higher, as seen in 2007-08 and 2010-11. A more effective approach combines targeted social safety nets to protect the most vulnerable with longer-term investments in resilience, including efforts to turn natural endowments into lasting prosperity.