The World Bank raises its forecast for oil prices

The World Bank raises its forecast for oil prices

access_time2020-10-26 09:43:09

The World Bank believes that while mineral and agricultural primary commodities have recovered their losses due to the Coronavirus pandemic, and are expected to achieve minimal gains in 2021, energy prices are expected to stabilize next year below their levels prior to the pandemic despite having recovered slightly.

The bank said in the Commodity Market Outlook report, oil prices tumbled sharply in the early stages of the Corona pandemic, but only partially recovered pre-pandemic price levels, while metal prices decreased relatively slightly and then returned to the levels that preceded the shock.

Agricultural crop prices have been relatively unaffected by the pandemic, but the number of people at risk of food insecurity has increased due to the wider effects of the global economic recession.

The report indicates that oil prices are expected to average $ 44 a barrel in 2021, slightly higher than the estimated average price of $ 41 a barrel in 2020. Demand is also expected to witness a slow rise only as tourism and travel continues to decline due to health concerns. It is not until the year after the next that global economic activity return to its pre-pandemic levels.

It is also expected that the restrictions imposed on supplies will ease steadily, and energy prices, which also include natural gas and coal, will recover significantly in 2021, after they witnessed sharp declines in their prices during 2020, which represents an upward revision of April price forecasts.

The emergence of a second wave of the Corona pandemic, and what it leads to from more complete shutdowns, reduced consumption, and delayed development and distribution of the vaccine against this virus, will lead energy prices to fall below the forecasts.

Metal prices are expected to record marginal increases in 2021, after falling in 2020, supported by the ongoing recovery in the global economy and the continuation of stimulus packages from China. Weak global growth rates over a long period of time may lead to lower energy prices than expected.

Expectations indicate that the prices of agricultural crops will rise slightly in 2021, after an increase of about 3 percent, in 2020 in the wake of some decrease in the production of edible oil.

Concerns about food insecurity persist in many emerging market and developing economies. These concerns arise from the strikes inflicted on income levels as a result of the global recession and obstacles to the availability of food at the local level, in addition to the restrictions imposed on crossing borders, which impeded the supply of labor, and the rate of food price inflation has increased significantly in many countries.


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