In 2025, commodity markets stand at a pivotal intersection where global growth, policy shifts, and supply dynamics converge. Understanding these forces is crucial for investors, producers, and policymakers alike.

Global Economic and Geopolitical Forces

Commodity prices are forecast to fall by 12% in 2025 and 5% in 2026, reaching their lowest levels in six years. This decline is driven by weakening global economic growth, ongoing trade tensions, and persistent supply growth across sectors.

Major geopolitical flashpoints—Russia-Ukraine, US-China trade disputes, and OPEC+ negotiations—add risk premiums to oil, metals, and agricultural markets. At the same time, central banks in developed economies signal tailwinds from easing monetary policy later in 2025, potentially reviving demand for capital-intensive commodities.

Supply Trends Across Key Sectors

Oil markets will see global supply expand by 1.2 million barrels per day in 2025, with OPEC+ contributing a modest 370,000 barrels per day. U.S. shale growth is slowing, and non-OPEC producers like Brazil, Canada, and Guyana will add roughly 400,000 barrels per day.

Natural gas faces ample stock levels, though the expiration of the Russia-Ukraine pipeline deal threatens European supply. This could boost U.S. LNG exports if demand picks up from Asia and Europe.

Metal markets diverge sharply. Copper confronts underinvestment and inelastic output, creating structural supply deficits in copper. Prices are expected to average $9,000 per ton in the first half of 2025, with potential peaks above $10,000 by late 2026. Steel, by contrast, suffers from oversupply—China’s domestic contraction is offset by rising exports, deepening global overcapacity.

Agricultural commodities show mixed signals. Soybeans and maize carry high stocks-to-use ratios, driven by robust Brazilian harvests and weak global uptake. Wheat remains balanced but vulnerable to weather, while rice prices should decline after India lifts export restrictions. Meanwhile, rising fertilizer costs may underpin a price floor across crops.

Demand Patterns and Emerging Shifts

Global oil consumption growth slows to 0.7–1.3 million barrels per day, half its pre-pandemic pace. In developed economies, EV adoption curbs fuel demand. Industrial metals will depend on a gradual manufacturing recovery outside China, and agricultural demand faces headwinds from trade tariffs, notably in China.

• Renewable energy projects boosting copper and lithium demand.
• EV adoption reshaping oil and battery metal markets.
• Shifts in Chinese import policies affecting U.S. crop exports.

Price Forecasts and Market Volatility

Broad commodity indices are set to linger below historical averages for several years. Yet, elevated price volatility and uncertainty persist, as geopolitical shocks or policy pivots could trigger sharp swings.

Strategic Responses for Market Participants

In the face of shifting supply-demand balances, companies and investors must adopt proactive measures to stay resilient and agile.

• Secure long-term supply contracts to lock in prices and volumes.
• Diversify sourcing across geographies and suppliers.
• Implement hedging strategies to manage price risk effectively.
• Adopt strategic supply chain resilience measures such as off-balance sheet inventory solutions.

Navigating Risks and Uncertainties

Several downside risks could push prices lower: a deeper global slowdown, renewed trade barriers, or a sudden reversal of OPEC+ cuts. Conversely, an unexpected supply disruption—geopolitical or climate-related—could spur rapid price spikes.

• Downside: Sharper economic contraction, tariff escalations.
• Upside: Monetary stimulus, trade détente, supply shocks.
• Climate risks: El Niño/La Niña disruptions harming crop yields.

Charting a Course Through Commodity Crossroads

As commodity markets navigate this intricate landscape, staying informed and adaptable is essential. By understanding the interplay of economic growth, policy shifts, and supply-demand dynamics, stakeholders can turn uncertainty into opportunity.

Adopting robust risk management, embracing emerging low-carbon technologies, and monitoring geopolitical developments will help chart a reliable path forward. In a world where critical minerals for energy transition stand alongside traditional fuels and crops, the ability to anticipate and respond will define success in the years ahead.

Ultimately, the crossroads of 2025 present both challenges and possibilities. With thoughtful strategies and vigilant analysis, market participants can thrive amid volatility and capture the upside of the next commodity cycle.