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Elevate Magazine
January 14, 2025

2025 Commodity Markets Face Rising Prices and Oversupply Challenges

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Photo Source: Jessica Lewis

The global oil market is set for turbulence in 2025, with OPEC+ struggling to expand production capacity. Although demand is expected to grow by one million barrels per day, output from non-OPEC+ countries is likely to surpass this, heightening competition. U.S. sanctions on Iran and Venezuela add further uncertainty, potentially shifting commodity market dynamics.

Bloomberg Opinion journalist Javier Blas notes that if the U.S. president takes aggressive action against Tehran and Caracas, Saudi Arabia might increase production, but without such intervention, there’s limited potential for Saudi crude expansion. OPEC+ faces pressure to maintain its influence in a fiercely competitive market with Brent crude hovering around $70 per barrel.

BP’s Financial Struggles


BP is confronting significant financial difficulties in 2025, with its market value plunging dramatically from $250 billion two decades ago to just $75 billion today. A strategic update in February is expected to show disappointing earnings, with profits falling well short of earlier projections.

A potential merger with Shell is becoming more likely as the company works to stabilise its finances, Industry insights suggest that a merger could offer BP a path to recovery. Further complicating matters, shrinking share buybacks may dampen investor confidence even further.

Coffee and Cocoa Prices Surge Amid Global Supply Shortages


Coffee and cocoa markets are poised for significant price increases in 2025 due to persistent supply shortages in major producing regions like Brazil and Vietnam for coffee, and West Africa for cocoa. The Arabica coffee prices are already reaching record highs, further increases are expected, potentially hitting 400 to 500 cents per pound. Similarly, cocoa production in West Africa remains below expectations, pushing cocoa prices to new peaks. Consumers will face higher costs for coffee and chocolate products due to the increases.

Iron Ore Market Faces Oversupply as Chinese Demand Stabilises


The iron ore market is entering a period of oversupply as demand from China, the world’s largest producer of steel, begins to level off. There is potential for an excess of iron ore, with new low-cost supply entering the market from regions like Guinea. Prices have already dropped from $200 per metric ton in 2021 to around $100 today, and further declines are anticipated. Global mining companies will need to adapt their strategies to work through this changing market.

Adjusting to an Unstable Commodity Environment


The commodity markets of 2025 are defined by volatility, driven by shifting political, economic, and environmental factors. From oil to coffee, cocoa, and iron ore, businesses must remain agile to thrive amidst uncertainty. According to Blas highlights, understanding political decisions and their impacts will be crucial for predicting commodity price trends in the year ahead.