All commodities soared on Thursday after Russia invaded Ukraine earlier in the day amid market fears of supply shortages of anything from crude and natural gas to wheat and aluminum.
Crude oil prices soared to $105 per barrel in the early hours on Thursday, after Russian President Vladimir Putin announced a “special military operation” in Ukraine. Oil exceeded the $100 a barrel mark for the first time since July 2014.
Natural gas in Europe, whose major gas supplier is Russia, skyrocketed at opening over fears that supply could be disrupted. The gas price at the Dutch TTF hub, the benchmark gas price for Europe, opened 40% higher on Thursday, at €125/MWh.
“Wheat and corn in Chicago both jumped by the allowed exchange limits of 50 and 35 cents on worries shipments from Russia and Ukraine, two major suppliers of grains and edible oils, could be disrupted,” Saxo Bank’s strategy team wrote in a daily note today.
Fears of sanctions and/or disruption of the supply of aluminum sent aluminum prices soaring to a record high, with the aluminum market already tight even before the Russian invasion of Ukraine.
Nickel prices jumped by 5% to $25,625 per ton, the highest level since May 2011. Platinum and palladium prices also jumped. Palladium, 40% of which is produced in Russia, surged by 6%.
“With base metals inventories already running extremely low, there is very little additional cushion for further supply disruptions — either from Russia directly or via higher-for-longer gas and power prices,” JPMorgan said in a note to clients on Thursday, as carried by CNBC.
“Though there have been no physical supply disruptions yet, there are serious concerns that Russia could move to restrict commodity exports in response to US sanctions,” RBC said.
Russia’s invasion of Ukraine “shocked global markets, with equities in a nosedive, oil prices jumping over five dollars per barrel, and gold rising sharply. The inevitable heavy sanctions that Western powers will impose today could aggravate the risks of higher energy prices from here,” Saxo Bank said.
By Tsvetana Paraskova for Oilprice.com
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