Conditions remain in place for a protracted period
of low commodity prices in coming years. Oil
prices are projected to average $49 per barrel in
2016, and then rise only gradually. Metal and
agricultural prices are likely to edge up in the
range of 1-2 percent. While geopolitical risks and adverse weather conditions could lead to a more
rapid recovery in prices, risks are on the downside.
In the case of oil, prices may come under renewed
downward pressure if weakness in emerging and
developing economies persists or if the Islamic
Republic of Iran receives substantial foreign
investment to expand capacity quickly (Iran has
the world’s largest proven natural gas reserves, and
fourth largest oil reserves). These developments
suggest continued significant headwinds for the
outlook for growth, fiscal positions, and trade of
commodity-exporting countries, emphasizing the
need to accelerate the diversification of their
economies.