Oxford Economics projects that commodity prices will stabilise by the middle of 2026 and begin a recovery into 2027 as economic activity strengthens and the drag from tariffs and uncertainty eases. The forecaster quantifies the near‑term weakness as an aggregate price decline of 1.3 percent in 2025 and a further 1.4 percent in 2026, as measured by the S&P Goldman Sachs Commodity Index, underscoring a shallow but broad cooling across many commodity markets.

The consultancy’s sectoral outlook is mixed. Natural gas and precious metals are expected to outperform, supported respectively by strong export flows and continued safe‑haven demand, while oil, agricultural commodities and base metals face continued pressure from oversupply and subdued industrial demand. That divergence signals winners and losers across producers, trading houses and national budgets that rely on commodity revenues.

Lead Economist Stephen Hare framed the assessment in terms of subdued activity: “Our commodity outlook remains more bearish than consensus for 2026, reflecting our below‑consensus expectations for economic activity,” concludes Hare. He also points to policy and trade frictions as a material near‑term headwind. Oxford Economics highlights the delayed impact of recent US tariffs on investment spending, saying that weaker capital expenditure will weigh on industrial activity and construction and, in turn, reduce demand for energy and metals.

For markets and policy makers the implications are immediate. A continuation of weak metal and oil prices would compress cash flows for mining and energy sectors, delaying or downsizing investment projects and potentially increasing corporate vulnerability if weaker earnings coincide with higher financing costs. For commodity exporters, softer prices translate into narrower fiscal space and weaker current‑account positions, complicating budget planning ahead of potential fiscal stimulus or tax changes.

Conversely, outperformance in natural gas and precious metals has distinct transmission channels. Stronger gas export flows—driven by pipeline and LNG volumes—would support energy revenues in producing countries and could temper upside risks to global consumer energy costs. Safe‑haven demand for precious metals typically rises with geopolitical and financial uncertainty, providing an offset for investors seeking portfolio hedges even when broader commodity prices languish.

Looking further ahead, Oxford Economics’ forecast of a recovery beginning in 2027 depends on a reacceleration of global growth and the fading of tariff‑related uncertainty. If those conditions materialise, the projected upcycle would lift industrial commodity demand, tighten inventories and shift market balances upward. Policymakers will need to track that transition closely: an earlier or stronger rebound could reignite inflationary pressures and prompt central banks to reassess monetary settings, while a deeper slump would raise questions about the timing and scale of fiscal support in commodity‑dependent economies.