Global Energy Prices to Decline in 2024

Chennai: Energy prices are expected to decline by 3 per cent in 2024, as natural gas and coal prices may remain subdued against oil prices which may be impacted by geopolitical issues. Energy prices may see a further decline of 4 per cent in 2025. Globally, agricultural prices are expected to ease as well in this year and next amid improved supply conditions.

According to the World Bank, commodity prices fell 3 per cent in the March quarter of 2024, driven by lower energy prices alongside relatively stable agriculture and metals prices. Natural gas prices plummeted, reaching levels almost 40 per cent lower than a year earlier. However, oil prices exhibited significant volatility, responding to escalating tensions in the Middle East and a supply outlook that was tighter than anticipated.

Brent crude oil prices surpassed $91/ per barrel in early April. Apart from geopolitical tensions and more production cuts by OPEC+, recent reductions in US inventories, coupled with revised projections from the International Energy Agency shifting from a predicted surplus to a modest deficit, have further bolstered market confidence. Oil prices are anticipated to average to $84/bbl in 2024 up from $83/bbl in 2023, before tapering to $79/bbl in 2025.

Agriculture prices saw minimal change in Q1, with decreases in food and fertilizer prices balanced by a surge in beverage prices, attributed to supply shortages induced by adverse weather conditions. Food insecurity remains a pressing issue, particularly in regions affected by conflict. The number of people experiencing acute food insecurity has risen sharply in recent years, to more than 282 million people in 2023 from 100 million in 2018.

Meanwhile, metal prices remained generally unchanged during the quarter, with a decline in iron ore prices offsetting increases in other metal prices.