Commodity prices spike on supply fears
The price of commodities including oil, gas, metal and wheat are soaring because of Russia's invasion of Ukraine.

“The global oil market is suffering what’s starting to look like the biggest disruption since the 1990-1991 Gulf War,” says Javier Blas on Bloomberg. Brent crude oil prices hit $110 a barrel early this week, their highest level since 2014, and other signs of strain are appearing. Russian oil usually trades at a few dollars discount to the Brent benchmark, but that has since widened to more than $18. Oil refineries are thought to be “self-sanctioning” – refusing to deal in Russian oil for fear of legal complications even if they are technically allowed to do so. That could see as much as two million barrels per day of Russian oil drop off world markets, worsening the existing shortage.
Meanwhile, Russian gas continues to flow to Europe through Ukrainian pipelines, says Adrien Pécout in Le Monde. At the outbreak of hostilities “the market anticipated that everything would suddenly cut off, then it calmed down, because the fundamentals of supply and demand are still there”, says Nicolas Leclerc of broker Omnegy. However, prices remain “very volatile”. European wholesale gas prices spiked towards €135 per megawatt hour last week but have since fallen to around €117, still short of December’s €188 record high.
Russia is also a “big supplier of aluminium and nickel, and produces about 40% of the world’s palladium”, says Jon Yeomans in The Sunday Times. That explains why aluminium hit a record high of $3,525 a tonne this week. Some other disruptions are more surprising: Ukraine, is a major supplier of “neon gas, used in microchips”. Russia is the world’s biggest wheat exporter, with Ukraine in fourth place. Wheat prices traded in Chicago are up 30% this year. Higher food prices are “certain to make day-to-day life harder for ordinary people across the world”.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
-
Generation X falls behind on retirement savings: how to boost your pension pot
The over-50s are lagging behind other generations when it comes to pension savings – here's why
-
How to spot a small cap stock
Picking the right small cap stock is difficult, but it can lead to outsize returns if you get them right
-
Investors can tap into juicy yields in overlooked companies’ debt and equity
Opinion Ian “Franco” Francis, fund manager, Manulife CQS New City High Yield Fund tells MoneyWeek where he’d put his money
-
Bitcoin 'has become the reserve asset of the internet'
Opinion The cryptocurrency has established itself as the electronic version of gold, says ByteTree’s Charlie Morris
-
A strange calm in credit
Corporate bond markets remain remarkably relaxed, with yields that offer little compensation for risks
-
Could colour diamonds add a sparkle to your portfolio?
Diamonds of various shades never go out of fashion, says Chris Carter
-
'Why you must own gold and Bitcoin'
Opinion The world is dedollarising, and gold and Bitcoin are the only alternatives. Buy now, says Dominic Frisby
-
Gold mining stocks outperform gold – can it last?
Opinion Gold miners are shining brighter than the yellow metal for the first time in this cycle. Enjoy the ride while it lasts, says Cris Sholto Heaton
-
How multi-asset trusts can help you deal with volatility
Multi-asset trusts help navigate global uncertainty and provide investors with an added layer of protection through diversification
-
Why MoneyWeek likes investment trusts
Investment trusts offer benefits that other forms of fund cannot match, says Rupert Hargreaves