Oil prices fell by 47 percent in 2015 and are expected to decline, on an annual average, by another 27 percent in 2016, according to the World Bank.
The bank, which serves as a key lender to developing countries, said it anticipated a gradual recovery in oil prices over the course of the year, describing the sharp oil price drops at the end of 2015 and early 2016 as not "fully warranted by fundamental drivers of oil demand and supply."
"High-cost oil producers are expected to sustain persistent losses and increasingly make production cuts that are likely to outweigh any additional capacity coming to the market. Demand is also expected to strengthen somewhat with a modest pickup in global growth," the bank said it is latest commodity markets outlook, published on Tuesday.
Oil prices tumbled to $28 earlier this month, lows not seen since 2003, on expectations that the market would flooded by renewed supplies from Iran after sanctions were lifted against Tehran. Prices continued to hover around $30 per barrel on Tuesday.
Beyond oil markets, all main commodity price indices are expected to fall in 2016 due to persistently large supplies, and in the case of industrial commodities, slowing demand in emerging market economies. In all, prices for 37 of the 46 commodities the World Bank monitors were revised lower for the year.