World Bank Forecast Points to Lower Crude Oil Prices

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Global crude oil prices are expected to linger at pandemic-era levels as increased global trade tensions point to a dramatic downturn in global trade, the World Bank said.

"After a succession of adverse shocks in recent years, the global economy is facing another substantial headwind, with increased trade tension and heightened policy uncertainty," the World Bank stated in its biannual Global Economic Prospects report. "This is contributing to a deterioration in prospects across most of the world's economies."

U.S. President Donald Trump upended a global trade order that existed since the end of World War II, when the U.S. helped to rebuild Europe through the Marshall Plan and other actions, creating a viable trading partner in the process.

Trump's return to the White House for a second, non-consecutive term came with an aggressive, protectionist trade policy with U.S. tariff rates now at their highest in nearly a century, sparking global retaliation and a downturn in the U.S. reputation on the world stage.

"The global economy today is at an inflection point," said Indermit Gill, the chief economist at the World Bank. "The forces that once drove economic convergence and lifted billions out of poverty are now in retreat."

Global growth is expected to be 2.3% this year, the slowest since 2008. As such, most global commodity prices are in retreat, despite the inflationary pressures from U.S. tariff policies.

The World Bank said that rising trade tensions are creating headwinds for oil prices. It expects Brent crude oil, the global benchmark for the price of oil, to average $66 per barrel this year and $61 per barrel in 2026, as demand growth falls to the five-year range before the start of the COVID-19 pandemic.

Brent hit $60.31 briefly in May. Before that, it was at that level in February 2021, one year into the COVID-19 pandemic.

Globally, the World Bank expects total commodity prices to drop more than 10% from year-ago levels and decline further in 2026, though that's largely due to the expected fall in crude oil prices. A broad-based deterioration in the global economy, coupled with heightened trade tensions, is eroding the demand for oil.

Natural gas, however, is another story. The World Bank expects the price for natural gas to climb "markedly" this year, due largely to price jumps in the U.S. market. Mild weather and ample supplies mean the European appetite is stable, though exports of liquefied natural gas (LNG) from the U.S. offset that as they draw on domestic supplies.

That said, global commodities are expected to decline, according to World Bank estimates.

"In all, energy prices are projected to decrease by 15% in 2025 and 7% in 2026, before increasing somewhat in 2027 as oil prices firm," the biannual report read.

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