(Bloomberg) — Global commodity prices are surging anew, with huge double-digit gains running rampant across the scorecard, putting further pressure on an already strained market and sparking fresh anxiety of stagflation.
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The market chaos caused by the war in Ukraine hit a new level on Monday amid reports the U.S. is considering a ban on Russian crude imports. That followed a warning by the International Monetary Fund of “very serious” economic consequences from the conflict and related sanctions imposed on Moscow. The rally from oil to wheat and natural gas to nickel is threatening a still-fragile economic recovery from the pandemic, exacerbating an inflationary surge for energy-consuming nations and worsening a cost-of-living crisis for millions.
Here are some of the day’s most notable moves and what they might mean for companies and everyday consumers.
Brent crude futures climbed as much as 18% to near $140 a barrel before pulling back as traders weighed the potential for the U.S. to crack down on Russian energy imports. Russia has been exporting approximately 5 million barrels a day of crude, the equivalent of about 5% of global consumption, as well as nearly 3 million barrels daily of refined products — key fuels such as diesel, fuel oil and a petrochemical feedstock known as naphtha. Goldman Sachs Group Inc. analysts estimate a sustained $20 shock in the oil price will lower gross domestic product by 0.6% in the euro area and 0.3% in both the U.S. and China.
Read: What a Ban on Russian Oil May Mean for an Already Chaotic Market
Nickel surged as much as 90% in one of the most extreme price moves ever seen on the London Metal Exchange as fears over Russian supplies leave buyers exposed to a historic squeeze. The metal added $26,081 a metric ton for the biggest-ever daily dollar gain in the 35-year history of the contract, before closing at $48,078. Russia is one of the world’s biggest suppliers of the metal, and the fear of sanctions or the inability to ship the metal has spooked an already tight market. More than 70% of the global supply of nickel goes into making stainless steel. Yet it’s the metal’s use in batteries for electric vehicles that has really caught the market’s attention in recent years.
Read: Nickel Spikes: Here’s Why That Matters and Who Will Be Hit
Dutch front-month gas, the European benchmark, surged as much as 79% to the equivalent of more than $600 a barrel of oil before trimming some gains as deepening supply fears gripped the market. Price fluctuations were in a range of almost 139 euros per megawatt-hour, the widest gap on record between intraday highs and lows. More notably, the range was equivalent to the actual price just a few days ago. Russia supplies about a third of European gas demand and a cutoff, or even a reduction, could imperil the economy and prolong an energy crisis into next winter. The fuel is primarily used for heating and to generate electricity. Pipeline shipments remain stable, with Gazprom PJSC reiterating Monday that flows crossing Ukraine are at a high level and going as normal. However, traders remain on edge for any potential disruptions.
Read: European Gas Surges 79% as Market Mayhem Drives Prices to Record
Wheat prices are on the cusp of a record. The intensifying war in Ukraine is cutting off supplies from one of the world’s leading breadbaskets. Together with Russia, they account for 25% of global shipments. Benchmark futures in Chicago surged by the daily limit for the sixth straight session, rising 7% to $12.94 a bushel. That builds on a massive surge of 41% last week, the biggest gain in data spanning six decades, and puts prices at their highest since 2008. The Paris contract for wheat breached an all-time high after jumping as much as 11%.
Read: War-Hit Crop Superpower Ukraine Faces Struggle to Even Sow
Pain at the pump is going to get more real for American consumers as gasoline flirts with the highest on record. The average price of unleaded gasoline is now at $4.065 a gallon, according to AAA, only 5 cents shy of its peak. With Nymex futures surging to a record on Monday, retail prices won’t be far behind as fuelmakers prepare for the onset of the summer driving season. This, despite the U.S. releasing 30 million barrels of oil from its Strategic Petroleum Reserve.
Read: How the U.S. Strategic Petroleum Reserve Works: QuickTake
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