Russia’s military aggression against Ukraine fuels fears of disruption of energy and raw material supplies. Black gold soared again after the decision of exporting countries of OPEC+, led by Saudi Arabia and Russia, of not increasing its production more than expected, despite rising prices, which is fueling rampant inflation in many countries.
A barrel of US WTI was selling at $110.95, up 7.29%, after reaching $112.51, its highest price since 2013. North Sea Brent gained 6.50% after reach 113.94 dollars per barrel, a maximum since 2014.
OPEC is already “unable to meet quotas”
For its part, the European reference price for natural gas, the Dutch TTF, reached a historical record of 194.715 euros per megawatt hour equivalent (MWh), and the price of British gas was trading very close to its historical maximum of the past December.
The decision of the OPEC+ “will not help allay fears about the supply shock caused by the sanctions on Russia, because the demand for oil is growing rapidly and OPEC is already unable to meet its own production quotas in several countries,” says Tamas Varga, an analyst at PVM. Ukraine by the Russian regime of Vladimir Putin has led the European Union and the United States to impose harsh sanctions on Moscow, fueling fears that Russian energy exports will be interrupted.
Russia is the world’s second largest exporter of crude oil. and supplies more than 40% of the annual imports of natural gas in the European Union.
Strong reduction in Russian exports
“The war in Ukraine is causing a sharp reduction in Russia’s energy exports, even though they are exempt from sanctions” for the time being, says Bjarne Schieldrop, an analyst at Seb. “Carriers are refraining from carrying Russian energy shipments for fear of potential sanctions and the reputational risks they face,” he adds.
“The risk now is that the West will come under increasing pressure to sanction Russian oil and gas exports,” said Neil Wilson, an analyst at Markets.com, which would send energy prices even higher.
The European Union has excluded seven Russian banks from the Swift international financial system, but has so far been careful to preserve two large financial institutions with strong links to the oil and gas sector. The Russian-Ukrainian conflict takes place at a time when oil prices were already rising sharply due to the lack of supply and the strong recovery in world demand caused by the lifting in many countries of the sanitary restrictions imposed to combat the coronavirus pandemic.
Maersk suspends orders to and from Russian ports
Now, “unless geopolitics calm down…we could see a continuation of this trend” with “domino effects across most asset classes and consumer prices,” warns XTB’s Walid Koudmani. Industrial metal prices were already dragged down on Wednesday, as “supply disruptions from Russia are increasingly likely,” notes Commerzbank’s Daniel Briesemann.
Danish shipping giant Maersk announced on Tuesday that it was suspending new orders to and from Russian ports, excluding food, medical and humanitarian products, due to international sanctions. “If other shipping companies follow this example, it will probably be more and more difficult to export materials from Russia,” the analyst stresses. The increase was especially marked in the case of aluminum and nickel, metals that depend heavily on Russian exports.
A tonne of aluminum hit $3,597 on the London Metals Market (LME) on Wednesday, an all-time high, while nickel neared its highest in 11 years, trading at $26,505 a tonne.
In 2021, Russia was the world’s third largest producer of aluminium, behind China and India, according to data from the World Bureau of Metal Statistics, and exports much of its production to Turkey, Japan, China, the United States and the EU.
Russia’s military aggression against Ukraine fuels fears of disruption of energy and raw material supplies. Black gold soared again after the decision of exporting countries of OPEC+, led by Saudi Arabia and Russia, of not increasing its production more than expected, despite rising prices, which is fueling rampant inflation in many countries.
A barrel of US WTI was selling at $110.95, up 7.29%, after reaching $112.51, its highest price since 2013. North Sea Brent gained 6.50% after reach 113.94 dollars per barrel, a maximum since 2014.
OPEC is already “unable to meet quotas”
For its part, the European reference price for natural gas, the Dutch TTF, reached a historical record of 194.715 euros per megawatt hour equivalent (MWh), and the price of British gas was trading very close to its historical maximum of the past December.
The decision of the OPEC+ “will not help allay fears about the supply shock caused by the sanctions on Russia, because the demand for oil is growing rapidly and OPEC is already unable to meet its own production quotas in several countries,” says Tamas Varga, an analyst at PVM. Ukraine by the Russian regime of Vladimir Putin has led the European Union and the United States to impose harsh sanctions on Moscow, fueling fears that Russian energy exports will be interrupted.
Russia is the world’s second largest exporter of crude oil. and supplies more than 40% of the annual imports of natural gas in the European Union.
Strong reduction in Russian exports
“The war in Ukraine is causing a sharp reduction in Russia’s energy exports, even though they are exempt from sanctions” for the time being, says Bjarne Schieldrop, an analyst at Seb. “Carriers are refraining from carrying Russian energy shipments for fear of potential sanctions and the reputational risks they face,” he adds.
“The risk now is that the West will come under increasing pressure to sanction Russian oil and gas exports,” said Neil Wilson, an analyst at Markets.com, which would send energy prices even higher.
The European Union has excluded seven Russian banks from the Swift international financial system, but has so far been careful to preserve two large financial institutions with strong links to the oil and gas sector. The Russian-Ukrainian conflict takes place at a time when oil prices were already rising sharply due to the lack of supply and the strong recovery in world demand caused by the lifting in many countries of the sanitary restrictions imposed to combat the coronavirus pandemic.
Maersk suspends orders to and from Russian ports
Now, “unless geopolitics calm down…we could see a continuation of this trend” with “domino effects across most asset classes and consumer prices,” warns XTB’s Walid Koudmani. Industrial metal prices were already dragged down on Wednesday, as “supply disruptions from Russia are increasingly likely,” notes Commerzbank’s Daniel Briesemann.
Danish shipping giant Maersk announced on Tuesday that it was suspending new orders to and from Russian ports, excluding food, medical and humanitarian products, due to international sanctions. “If other shipping companies follow this example, it will probably be more and more difficult to export materials from Russia,” the analyst stresses. The increase was especially marked in the case of aluminum and nickel, metals that depend heavily on Russian exports.
A tonne of aluminum hit $3,597 on the London Metals Market (LME) on Wednesday, an all-time high, while nickel neared its highest in 11 years, trading at $26,505 a tonne.
In 2021, Russia was the world’s third largest producer of aluminium, behind China and India, according to data from the World Bureau of Metal Statistics, and exports much of its production to Turkey, Japan, China, the United States and the EU.
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