02 Mar Oil and aluminium continue to surge as investors ditch Russian businesses
The global commodities market has continued its upward price trajectory in the wake of Russia’s enveloping invasion of Ukraine, which has compelled investors to turn away from assets of Russian origin.
Fears of potential shortages of fossil fuels and key metals pushed up commodities markets to multi-year highs on Wednesday. Russia is the world’s largest energy exporter, a vital metals supplier and together with Ukraine accounts for 25% of wheat shipments.
Although natural resources have avoided direct sanctions thus far, traders, banks and shipowners are increasingly wary of the reputational damage that could be incurred by continuing to do business with Russia.
Brent crude oil climbed more than 6% to US$111.46 a barrel, after breaching $113 a barrel earlier in the day – the highest its traded at since June 2014. This is after data emerged revealing how some of the world’s biggest energy consumers have started boycotting Russian oil.
Aluminium hit a fresh record today, trading at $3,552 a tonne on the London Metal Exchange. Commerzbank analyst Daniel Briesemann told Reuters he wouldn’t be surprised to see aluminium soon rise to $4,000 a tonne.
“Supply outages from Russia are now but a question of time. Depending on how long they last, they could cause turmoil – in which case prices would rise significantly further,” said Commerzbank analysts in a note.
The price of nickel rose to $25,530 a tonne, close to an 11-year high reached last week. Palladium hovered near a seven-month peak hit on Tuesday, and zinc and copper prices also climbed.