Oil passes $100, gold up as Russia launches full-scale Ukraine invasion

A range of commodities including oil, gold, nickel, palladium, platinum and aluminium have seen sharp price rises today following Vladimir Putin’s order of a full-scale Russian invasion in Ukraine.

Brent crude jumped 6.6% to an eight-year high of US$103.21 a barrel following Putin’s announcement of a ‘special military operation’ in Ukraine. Multiple explosions were heard in Ukraine’s capital Kyiv and other major cities, just minutes after the televised speech.

Oil prices have gained more than $20 a barrel since the start of 2022, with the majority of those gains made in the last month, during which the threat of war in Europe has intensified along with fears of US and EU sanctions on Russia’s energy sector.

Russia is the world’s second largest oil producer and sells most of its crude to European refineries. It is also the largest supplier of natural gas to Europe, providing about 35% of its supply.

The US and European powers are currently discussing a stronger set of economic penalties on Russia, after initial sanctions made little headway with regards to preventing the full-scale invasion.

Gold – the long-held safe haven investment – prices were up 1.85% to $1,945 per ounce, while palladium, which is used in the production of catalytic converters, rose 6.6% to $2,600 an ounce.

Nickel, a key ingredient in steel-making, also gained 5.6% to trade at $25,755 a tonne on the London Metal Exchange, reaching an 11-year high in the process. The metal is also witnessing rising demand from the electric vehicle sector.

“The market reaction to these developments has been seismic,” said Deutsche Bank’s head of global fundamental credit strategy Jim Reid. “A significant way the events in Ukraine will affect the rest of the world is regarding inflation, and even before we saw $100 a barrel oil overnight, that relentless rise in commodities showed no sign of abating.”