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Russo-Ukrainian War: oil and commodity shock

Alex Brummer says in Daily mail. But “it is starting to reach parts of the global industrial economy with little notice”. Witnessed turmoil on the London Metal Exchange this week as soaring nickel prices forced the exchange to suspend trading for the first time since the “tin crisis” of 1985-86, which pushed many brokers out of business. The price of nickel, used in stainless steel and EV batteries, “increased up to 250% in two days”, said Bloomberg, leaving brokers “struggling to settle margin calls on unprofitable short positions”, in a massive squeeze that has also gripped the world’s largest nickel producer, Tsingshan Holding Group and a major Chinese bank participated. The root cause: concerns about Russian supplies being disrupted.

“Overall commodity inflation is higher than it has been in the past quarter century,” Ben Wright said in Daily telegram. But most of the pain continues to be felt in energy markets. Politicians around the globe are now warning of an “oil shock” in the style of the 1970s. Discussion of an oil embargo sent Brent oil futures to nearly $140 a barrel on Monday. , “breaks records in euro, pound and most other currencies,” Ambrose Evans-Pritchard said in same sheet of paper. After the US actually banned the import of Russian oil and gas, prices calmed down a bit due to European restraints (German foreign minister said that would cause “chaos”), but JPMorgan scored $185 in a “sustainable stand”. Barclays fears $200 and soaring gas prices. “These prices imply intense demand destruction and recession” – not good at all, but “horrible for China, which uses twice as much energy per unit of GDP compared with France and Germany”.

The White House ban “is the most significant move in the rapidly escalating global energy war”, FT. Could the US or other manufacturers be in violation? US oil executives say a quick response from the US shale industry is unlikely. The Biden administration has scoured the world for more barrels, lobbied the OPEC+ alliance to increase supply and forged potential deals to free up Iranian and Venezuelan crude. The International Energy Agency has announced the release of 60 million barrels of reserves from its emergency stockpile. “However, the sheer scale of Russia’s footprint” in oil The market – the country is the world’s third-largest producer, supplying about 10% of the oil used globally – means that a complete loss of supply is almost irreplaceable quickly. The uncertainty is unprecedented – and the market remains in a strong position.

https://www.theweek.co.uk/business/city/956058/russia-ukraine-war-oil-commodities-shock Russo-Ukrainian War: oil and commodity shock

Fry Electronics Team

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