It’s been another day of wild market moves, mainly in commodity markets. Fears that Russia’s invasion of Ukraine and wider sanctions imposed by the west could affect supplies from both countries have driven oil and gas prices sharply higher, and have also driven up other commodities such as wheat and corn, and metals.
Wheat hit a 14-year peak while aluminum reached a new record high of $3,597 a tonne. Oil prices jumped to near eight-year highs. Brent crude, the global oil benchmark, rose as high as $113.94 a barrel, the highest since June 2014, and has been trading around $111 for most of the day. It has pared some of the gains since then while US light crude is 2.6% higher at $106.1. Brent has gained some 40% so far this year.
The flow of natural gas in Europe is more likely to be disrupted by conflict in Ukraine than the flow of oil, analysts say. The price of natural gas jumped almost 19 percent to 105.6 euros a megawatt-hour on the TTF exchange in the Netherlands.
The extent of the Russian military operation ordered by President Vladimir V. Putin appeared to surprise some market participants and could explain the powerful jump in prices, said Richard Bronze, head of geopolitics at Energy Aspects, a research firm.
“There was a mistaken view in the market as recently as yesterday that either Putin had gotten enough to pause or that things would be limited to the Donbass,” the disputed region in eastern Ukraine, he said. What the energy markets are mainly worried about, he said, are the Western sanctions that are likely to be imposed in response to the invasion.
The concern is that those financial penalties will disrupt oil and gas flows from Russia, despite assurances to the contrary by Western officials. Mr. Bronze said some buyers were steering away from purchases of Russian oil while they waited to see the scope of the sanctions that emerged.
