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Sanctions, metals and oil: markets before 10 March 2022
Summary
Early March 2022 reports showed commodity markets and Western governments adjusting to the prospect of losing Russian supply.
How far could sanctions on Russia reshape global commodity supply? By 10 March 2022, two reports from the preceding days offered an early answer.
On 7 March 2022, aluminium and nickel set record prices on the London stock exchange, at about $4,000 and $55,000 per tonne respectively. Nickel rose 90% in intraday trading. Copper also reached a new high of $10,845 per tonne, and palladium hit $3,440 per ounce. Russia is a substantial producer of all of these metals, and the market expected shortages as further sanctions took hold.
Looking for alternative crude
The energy side followed a similar logic. On 6 March 2022, the United States began talks with Venezuela about supplies of its oil, which was under sanctions, in an attempt to replace Russian crude. The talks had so far yielded few results.
Taken together, the reports show that the sanctions pressure was being priced in by metals traders and weighed by Washington as a supply problem, with the search for substitutes only starting by 10 March 2022.
