INTERNATIONAL oil and commodity prices continued rising yesterday as Western countries mulled stricter bans of Russian oil and gas imports over its invasion of Ukraine.
The UK yesterday announced plans to phase out Russian oil imports in the coming months while the EU would reduce Russian gas imports by almost 80 percent this year.
The US is also hinting at the possibility of banning imports of Russian oil, with Moscow threatening to retaliate by suspending gas exports to Europe.
Brent oil prices touched $130 (R2000) per barrel as concerns grew over the disruption of Russian oil exports.
Total Energies was the first big oil company to announce its traders will no longer buy Russian crude and most buyers are already shunning its supplies.
Shell yesterday followed suit, announcing its intent to withdraw from its involvement in all Russian hydrocarbons, including crude oil, petroleum products, gas and liquefied natural gas (LNG) in a phased manner.
Russia plays a key role in global energy markets as it is the third largest oil producer and second largest oil exporter globally.
Before the war, Russia exported 4.7 million barrels per day of crude and 2.8 million barrels per day of oil products globally.
Reduced inventories worldwide and a delay in reviving the Iran nuclear deal after Russia demanded trade guarantees from the US was also putting pressure on oil prices.
On Monday, Brent crude rose above $139 per barrel before settling at $123.21 per barrel, its highest since July 2008.
ActivTrades senior analyst Ricardo Evangelista said the ban on Russian exports could spell disaster for global fuel prices in the coming months.
“Amidst a very tight energy market, the withdrawal of the 7 million barrels a day exported by Russia could have a devastating effect and end up driving prices to unprecedented high levels,” he said.
“That scenario is creating anxiety in the market and, as geopolitical tensions flare up, there may be scope for further price spikes.”
Meanwhile, gold prices hit a fresh 18-month high, reaching $2 059 per ounce as the investor flight to safety intensified.
The economic fallout from the war in Ukraine is worrying market operators, with the growing likelihood of Russian oil and gas ban or withheld by Moscow as retaliation for other sanctions.
The price of nickel also surged to $80 025 per tonne yesterday, having topped the $100 000 mark for the first time ever and almost tripling in value as geopolitical tension sparked concerns over the metal supply.
The unprecedented move in the nickel market led the London Metal Exchange to halt trading for the remainder of Tuesday’s session.
Russia accounts for about 10 percent of the global nickel supply, mainly for use in stainless steel and electric vehicle batteries.
Nickel was already rallying before Russia’s invasion of Ukraine as robust demand from the stainless steel and battery industry drained inventories, which now stand at 76 830 tonnes in LME-registered warehouses, their lowest since 2019.
BUSINESS REPORT ONLINE