Commodity prices are still elevated - IMF

The International Monetary Fund (IMF) says global commodity prices remain elevated despite a moderation in oil prices following recent geopolitical developments, including ceasefires and a memorandum of understanding between Iran and the United States.

In its July 2026 World Economic Outlook (WEO), the IMF noted that while energy prices continue to exceed pre-war levels, easing tensions in the Middle East have helped cool prices from the highs recorded in April 2026.

According to the IMF, energy prices remain approximately 25 percent higher than pre-war levels, reflecting the lingering effects of supply disruptions and geopolitical uncertainty.

The Fund explained that oil markets continue to price in these risks, with the oil futures curve remaining in backwardation—a market condition where current spot prices are higher than futures prices—through the end of 2026.

This pricing pattern, the IMF said, is consistent with expectations of temporary supply constraints and heightened geopolitical risks.

Despite continued market uncertainty, the IMF has revised its outlook for average global oil prices.

The report projects an average petroleum spot price of US$78 per barrel in 2026, lower than the US$82 per barrel forecast in the IMF's April 2026 World Economic Outlook.

The latest projection is also well below the US$100 per barrel assumed under the adverse scenario outlined in the April report.

According to the IMF, the moderation reflects improving market conditions despite ongoing geopolitical tensions.

The Fund attributed the relatively modest increase in oil prices to the use of global inventories to offset supply disruptions.

Although oil shipments through the Strait of Hormuz have declined, the IMF said stockpiled reserves have helped compensate for part of the shortfall, reducing the need for significant adjustments in global production and consumption.

It added that ceasefires and the memorandum of understanding between Iran and the United States have also reassured markets that some supply disruptions may be temporary, encouraging inventory adjustments rather than sustained price increases.

While global benchmark prices provide a broad indication of market conditions, the IMF stressed that the actual cost of imported oil varies significantly from one country to another.

According to the report, factors influencing national oil prices include:

• The type and quality of crude oil imported.
• Geographic distance from suppliers.
• Long-term bilateral supply agreements.
• International sanctions.
• Domestic taxes, subsidies and market regulations.

As a result, increases in retail fuel prices have differed considerably across regions since the onset of the conflict.

The IMF noted that retail gasoline prices have risen by approximately 30 percent in emerging Asia, compared with 15 percent in Latin America.

The report also highlighted significant differences in global natural gas markets, which remain less integrated than oil markets.

According to the IMF:

• Liquefied natural gas (LNG) prices have increased by about 50 percent in Asia.
• LNG prices have risen by approximately 25 percent in Europe.
• By comparison, US Henry Hub natural gas prices have increased by only 10 percent since the conflict began.

The Fund said these regional disparities reflect differences in supply infrastructure, market integration and dependence on imported energy.

Although commodity prices have eased from their recent peaks, the IMF cautioned that global energy markets remain vulnerable to geopolitical developments and supply disruptions.

The Fund noted that future price movements will depend on the durability of recent diplomatic agreements, the stability of global supply chains and broader geopolitical conditions affecting energy-producing regions.