The Global Commodity Price Forecast: An Expert Outlook

Geopolitical risks, supply issues, and the Fed's interest rate policies will be the driving forces that push crude oil prices to the $85 per barrel mark. Precious metals such as silver and platinum, along with industrial metals like copper, will take on a safe-haven role, providing a hedge against inflation and economic uncertainty.


The international workshop on the theme “World Economic Outlook and its Impact on Commodity Markets 2024” organized by the Vietnam Commodity Exchange (MXV) has received many contributions from international experts. Most of the opinions at the workshop expressed concern in forecasting the world commodity market with ongoing uncertainties.

Since the beginning of the year, world crude oil prices have fluctuated in two main trends. Until the first half of April 2024, oil prices continuously surged due to supply and demand factors, geopolitical tensions, and partly due to macroeconomic influences.

Recently, crude oil prices have stabilized as supply pressures eased while conflicts in global hotspots did not create a clear pressure on supply.

WTI oil prices have weakened and are currently trading in an accumulation range between $77 and $80 per barrel, about 10% lower than the peak of over $90 per barrel set in the first week of April 2024.


Mr. Pham Quang Anh, Director of the Commodity News Center of the Vietnam Commodity Exchange (MXV), pointed out three main reasons for the contrasting movements of world oil prices in the first five months of 2024.

First, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) continuously implemented a policy of limiting production. With power in their hands and a desire to keep oil prices high, OPEC+ repeatedly extended the policy of voluntarily cutting production by 2.2 million barrels per day until the end of the second quarter of this year. In addition, in March 2024, Russia announced that it would further cut production and export by 471,000 barrels per day. With strong moves from OPEC+, the US Energy Information Administration (EIA) in April 2024 even estimated that the market was facing a shortage of about 1 million barrels per day in the second quarter.

Second, geopolitical tensions have continuously escalated and are unpredictable, especially in the Middle East. After the prolonged escalation between Israel and Hamas since last year, the crude oil market continued to be turbulent when Yemen and Iran were drawn into the conflict, with Yemen repeatedly attacking commercial vessels in the Bab-el-Mandeb strait, through which about 5 million barrels of crude oil are transported daily. Meanwhile, tensions in the Middle East escalated further after Iran directed drones and missiles at Israel in retaliation for what it suspected was an Israeli bombing of its embassy. The constant escalation of tensions, especially in the Middle East, a region of utmost importance on the world oil map with top exporters, has pushed oil prices higher.

Third, the Fed’s policy expectations have continuously shifted. In the first two months of the year, the market was very optimistic about the prospect of the Fed cutting interest rates soon after a period of continuous tightening of monetary policy in the fight against inflation. UBS Investment Bank, a large Swiss bank, even argued that the Fed would cut the base interest rate by 275 points this year.

However, after witnessing a resurgence of inflation in the US since March 2024, the market’s optimism faded and organizations began to change their views by pushing back the timing of the Fed’s interest rate cut. Policy pressures have put pressure on world oil prices.

At the workshop, Mr. Erik Norland, Executive Director and Senior Economist of CME Group, said that in the face of supply cuts from OPEC+ and geopolitical risks, the US has continuously increased its oil production to make up for the shortfall.

“After the outbreak of the Russia-Ukraine war in 2022, which continues to this day, and tensions in the Middle East, crude oil prices have mostly fluctuated between $75 and $85 per barrel. With these developments, oil prices should have surged above $100 per barrel, even above $150 per barrel. Why is this the case?” Mr. Erik Norland asked.

Mr. Erik Norland, CME Group.

“Global oil demand has decreased. After the pandemic, many people switched to working and shopping online, reducing the need for travel and thus stabilizing oil demand.”

According to Mr. Erik Norland, the US has actively increased its oil production. Two years ago, US crude oil production was about 2 million barrels per day, but by the end of 2023, it had increased to nearly 13 million barrels per day. Thus, the US alone has replaced one-third of OPEC’s production cuts. In addition, some other countries have increased their oil production by about 500,000 barrels per day. The US and other countries have made up for about 50% of OPEC’s production cuts.

In addition, the oil inventories of these countries have also increased significantly in recent years. As a result, the market has a relatively good buffer to absorb shocks, which has somewhat eased supply pressures and made it difficult for crude oil prices to surpass $100 per barrel.

However, the biggest factor affecting global oil demand is China. The expert from CME Group said that China is the world’s largest oil consumer. However, since 2023, the economic growth of this country with a population of billions has slowed down, causing a significant decrease in oil consumption. Looking back, all the periods of booming economic growth in China have corresponded to record-high oil prices.


Mr. Pham Quang Anh assessed that supply pressures are showing signs of easing. “Actual data shows that OPEC’s production in April still exceeded the target quota, especially for some large members such as Iraq and the UAE. An inspection by the OPEC Committee in Iraq even found that the country’s production exceeded its quota by 600,000 barrels per day in early 2024,” said the MXV representative.

According to experts, geopolitical risks, supply, and Fed policy could be the driving forces for oil prices in the second half of 2024. WTI crude oil is expected to rebound and fluctuate around $85 per barrel.

“Although geopolitical risks have eased, they cannot be completely ruled out of price estimates as security tensions in the Middle East have not yet stabilized. The escalation of conflicts by countries, especially Iran, which holds about 3% of the world’s crude oil supply, will bring heat back to the market,” analyzed Mr. Pham Quang Anh.

The improving macroeconomic picture will be a factor influencing oil prices in the second half of 2024. Although the timing of the interest rate cut has been pushed back, most Fed officials agree that rates will be cut this year to avoid a “hard landing” for the economy. The prospect of lower interest rates is a catalyst for oil prices…