MOSCOW, 26 APR – PRIME. Commodity prices will remain at historically high levels until 2024 due to the situation around Ukraine, follows from the report of the World Bank (WB).
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“The situation in Ukraine has dealt a severe blow to commodity markets, changing global patterns of trade, production and consumption in such a way that prices will remain at historically high levels until the end of 2024,” the report says. Moreover, in the event of a more protracted conflict or additional anti-Russian sanctions, prices may turn out to be even higher and more volatile.
The increase in energy prices over the past two years has become the strongest since the 1973 oil crisis, according to the report. The WB believes that energy prices will rise by more than 50% in 2022 and then fall in 2023 and 2024. Brent oil is expected to average $100 per barrel in 2022, with the average price dropping to $92 in 2023. Natural gas prices will double this year, and coal prices by 80%.
The World Bank expects prices for non-energy goods to rise by about 20% in 2022. At the same time, the greatest growth will be noted among goods, the key exporters of which are Russia and Ukraine. In particular, wheat prices could rise by 40% this year, reaching a record high. Rising prices for fertilizers could lead to a reduction in their use, which in turn will lead to lower yields of some crops. In 2023, while prices will remain high, they could ease slightly as shipments from Argentina, Brazil and the US are likely to increase.
Metals will rise in price by about 16% in 2022 and fall slightly in 2023. In particular, the cost of nickel and aluminum will rise by 52% and 38%, respectively, which “reflects the huge role of Russia as a supplier in these markets.” At the same time, restrictive measures introduced in China due to the coronavirus could reduce demand for metals and keep prices down.