Energy, Metals, and Agricultural Markets Brace for Russia-Ukraine Impact

How the Geopolitical Tension Is Affecting Prices

Eastern Europe is a key source of metals, natural gas, oil, and wheat for the global market. As tensions escalate along the border of Russia and Ukraine, investors worry the world could be cut off from these commodities. Prices have been rising in response.

Global oil prices are included in that trend, with Brent crude approaching $100 a barrel, recently hitting the $99.50 mark — the highest recorded since 2014. Natural gas prices have similarly risen, and could remain on an upward trajectory, as a brand new pipeline linking Russia and Europe has been suspended in response to Russia’s actions. Both Ukraine and Russia also produce large amounts of nickel, aluminum, and wheat, causing prices to spike as the situation unfolds.

Watching Oil and Natural Gas in Particular

Russia is one of the world’s largest producers of oil and natural gas. Around 38% of Europe’s natural gas needs were met through Russian imports in 2020. Analysts predict the cost of debt and shipping will rise as economic sanctions take their toll on Russia, which in turn will push up natural gas prices.

Armed conflict and sanctions could cut off Russian exports, and the country provides around 10% of the world’s oil supply. Analysts explain both Russia and the US have not been aggressively replenishing oil stockpiles as demand has surged. This could be a result of producers not wanting to oversupply the market, which would crater prices.

Metals and Agriculture Also Impacted

In addition to Russia’s global importance in terms of oil and gas, it’s also the world’s fourth-largest exporter of wheat. Ukraine, long known as Europe’s breadbasket, routinely ships large amounts of corn and wheat from ports in the Black Sea. Analysts say it’s fair to expect agricultural markets could experience major upheaval as a result of the nation’s conflict.

Metals used in various industrial operations and the creation of consumer products are often imported from Eastern Europe. Russia is one of the world’s major producers of aluminum and nickel, for example. Nickel in particular is used in electric vehicle batteries, and any upward pressure on prices comes amid the ongoing chip shortage. Analyzing prices for fuel and raw materials, it’s clear the market is well aware of this conflict’s potential impact.

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