Is 2022 commodity crisis bigger than oil crisis of the 1970s?

Follow us on Google News:
 Is 2022 commodity crisis bigger than oil crisis of the 1970s?
Image source: Copyright © 2022 Kalkine Media®
                                 

Highlights

  • The tussle between Russia and Ukraine has catapulted global commodity prices to record high levels.
  • The recent spike in crude oil prices has drawn comparison to the oil crisis of the 1970s.
  • Analysts from leading investment firms believe that the rally in the commodity market is just a trailer, and more is yet to come.

The Russian invasion of Ukraine on 24 February has catapulted global commodity prices to record high levels. Both Russia and Ukraine are among the world’s leading producers of commodities, including crude oil, metals, and food products like wheat and corn.

Escalated tensions between Russia and Ukraine had pushed commodity prices close to registering the fastest pace for over half a century last week. On top of this, Western sanctions on Russian financial institutions have led many traders to exit from doing business in the country.

For many, escalating oil and commodity prices are giving flashbacks of the oil crisis in the 1970s. Let’s find if the 2022 commodity crisis is bigger than the oil crisis of the 1970s. 

Good Read: Here’s why precious metals are shining amid gloom of war

Rising commodity prices

The tussle between both the nations pushed Brent Crude Oil prices to as high as US$139.13/bbl on Tuesday after the US decided to ban Russian oil imports, further deepening supply concerns. 

Commodity prices

Source: Refinitiv Eikon

The recent spike in crude oil prices had drawn comparison to the oil crisis of the 1970s when crude oil prices increased fourfold after the Organisation of Arab Petroleum Exporting Countries put an embargo on their oil exports.

Video Link- As Russia-Ukraine War Intensifies, Commodities Also Soars

Besides crude oil, the impact of the war has affected prices of other commodities like nickel, aluminium, palladium, etc., which rose to fresh all-time high levels lately. Additionally, food products including wheat, corn, palm oil and others have also jumped to multi-year highs in the past week.

Nickel prices also surged by a whopping 65% on Tuesday to hover near US$80,025/t after hitting US$101,365/t in previous session on the same day.

Also Read: Nickel price surpasses US$100,000/t; ASX nickel stocks rise

What stockbroker predicts

Analysts from leading investment firms, including Goldman Sachs, believe that the rally in the commodity market is just a trailer, and there is more to come. The broker has increased its Brent Crude Oil forecasts to average at US$135/bbl through 2022, significantly up from its previous forecast of US$98/bbl.

Commodity price prediction

Source: © Bradcalkins | Megapixl.com

Furthermore, the stockbroker also predicts gold to hit US$2,500/oz this year, blasting through earlier highs of US$2072.50/oz, which was achieved in August 2020 amid the first wave of the COVID-19 pandemic.

Russia is a leading player in the commodity market. The country accounts for nearly one-third and one-tenth of the world’s total palladium and platinum production, respectively. The country also fulfils around 5% of the global nickel demand and is one of the leading suppliers of thermal coal. Its steel exports also account for about 6.5% of the world’s total sea-borne steel exports.

To know how commodities performed in the last week, click here

Ongoing Russia-Ukraine tensions are anticipated to flare up commodity prices, which are already facing the heat due to supply disruptions since the beginning of the COVID-19 pandemic.

Bottom Line

The global commodity market has witnessed a staggering price surge in the last week due to rising concerns related to supply shortages amid escalated tensions between Russia and Ukraine. As Russia-Ukraine tensions continue for a longer period, there remains significant ambiguity in the market regarding stabilising spiralling commodity prices.

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.

Featured Articles

Top ASX Listed Companies


We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.