In this market‑commentary video, the presenter provides a rapid, real‑time update on how the Russia‑Ukraine war is reshaping global commodity markets. He notes that WTI crude futures have surged to a session high of about $128.84, approaching the 2008 peak, driven by imminent U.S. sanctions that will ban imports of Russian oil, LNG, and coal. He outlines parallel policy moves by the United Kingdom (phasing out Russian oil imports) and the European Union (targeting a two‑thirds cut in Russian gas imports). The speaker explains the geopolitical risk of Russian retaliation via Nord Stream 1, which could further tighten European gas supplies. He then shifts to base metals, describing a dramatic nickel short‑squeeze on the LME that pushed prices from $20,000 to $100,000 per tonne, highlighting the role of Tsingshan Holdings and the broader impact on EV battery costs. Agricultural commodities are also rallying, with wheat climbing toward $14 per bushel and a G7 agricultural ministers meeting slated in Germany. Finally, gold is shown to be benefitting from a flight‑to‑quality, trading around $2,063 per ounce. Throughout, the presenter ties each price move to the underlying policy headlines and geopolitical tensions, emphasizing the interconnectedness of energy, metals, and soft commodities in the current crisis.
Chapters
Okay, I hope you're doing well and just wanted to put out this breaking piece because WTI crude futures into this US session are up nearly $10, and it follows a parabolic move we had in nickel prices yesterday. And of course, all of this really coming from this ongoing Russian-Ukraine situation. The latest— what I'm going to cover here is, as you can see from these headlines, about a US oil ban. We've also got UK oil bans, EU oil bans. The Russian retaliation effect with Nord Stream 1, because it's going to potentially impact Germany, which has also got people nervous this morning. And then you've also got some of these other commodity prices, both in base metals as well as soft agricultural goods, all rallying at this point in time. So let's get straight to it and talk about the oil price. And here's just a look at a 30-minute candlestick chart. And as you can see here, as we've gone into the North American crossover, prices have gone quite deeply higher up to around $128.84 at the session high so far. So up around $8.50 on the day. A lot of this coinciding with some of those aforementioned headlines that have been hitting the tape. But in context, this is what it looks like on a weekly candlestick to give it a bit of context over the period going back to 2007. The peak that we had in 2008 up at $147 certainly doesn't look off the table at this point in time. And just to see the type of price movement that we've had where we were trading really a $90 handle prior to the invasion taking place at the end of Feb to where we're at now, trading, knocking on the door of 130 here for the time being. So what are these headlines? What is it you need to be aware of? Well, the Biden administration will impose a ban on US imports of Russian energy today, importantly, without the participation of its European allies. And that's according to people familiar with the matter. Joe Biden is due to speak at 3:45 London time, so I'm recording this ahead of that, so we're going to see probably the confirmation of some of these reports that we've had emerge over the last 24 hours. The ban itself is going to include Russian oil, liquefied natural gas, and coal. And to give it some numbers, um, to, to have context, Russian oil made up about 3% of all the crude shipments that arrived in the US last year, according to the EIA in the US. And overall imports of Russian oil and petroleum products represented around 8% of the US total. Okay, this is a comparison to the gas supply that Germany depends on Russia, which is around a third, also 30% plus. And so you can see here as well, what will be interesting to watch is the relationship between the US looking to take such aggressive action when really the retaliation effect is probably going to be more targeted at Europe, which is supposed to be the allied nations, of course, around the US and the unified West. Now the other things here is it's not not just the US. We've also had the UK come out. UK government plans to phase out all imports of Russian oil. Its latest sanctions move here, we've heard announced within the last hour over this war in Ukraine, is again citing people familiar with the matter, so yet to see official confirmation from the government. The move would be in concert with the US, and the ban would be phased in over the coming months. So do keep that in mind. This isn't this kind of metaphoric kind of twisting of the wheel and the gas and oil just goes on and off quite simply. They're talking about this being over a period of multiple months, and the ban won't apply to Russian gas. They're just talking about specifically oil, and this could be quite an interesting play that you see unique to individual countries and their stances depending on the dependency on those individual products, of course, going further forward. Then You've got the EU, so it's coming on multiple fronts at the moment. And the European Union has published a plan just a short while ago to cut Russian gas imports by two-thirds within a year is their target, as it seeks to reduce its dependency on the country's fuel supplies given Moscow's invasion of Ukraine. So multiple things all happening. And one of the big things that we're seeing as well, this is the pipeline infrastructure, of course, um, of important gas pipelines in Europe. And late yesterday, you probably would have clocked comments from the Russian Deputy Prime Minister Alexander Novak. He came out and basically threatened to cut off natural gas supplies in Europe through Nord Stream 1. This comes, of course, after Germany's decision to block the licensing and the agreements over the new Nord Stream 2. And this was always the, the kind of tail risk of retaliation that could have ensued and has done now from the verbal, at least, threats that have come by way of Russia. So that's also fired things up a little bit. Nord Stream 1 is owned and operated by Nord Stream, which is the majority shareholder in the Russian state company Gazprom. There are other European players involved with that, but my understanding is, is that Gazprom is the majority owner of that. And so obviously what decisions they make are going to be integral then to the gas flow that does come through other key strategic networks from Russia, like the Yamal-Europe and Brotherhood but Nord Stream 1 being impacted would have huge consequences. Novak went on to say it's absolutely clear, quote his words, that rejection of Russian oil would lead to catastrophic consequences for the global market, even stating the oil market could reach $300 a barrel. So it really is kind of a game of bluff at the moment, but it's getting all the more serious as time goes on. The other final thing then is, is just metal prices have also— nickel yesterday was just insane. The metal surged from $20,000 to $100,000 a ton. Nickel is used in stainless steel, it's used in electric vehicle batteries, and so you've— I saw some comments coming out of VW, there's been comments out of Tesla and so forth, because the cost implications this is going to have are going to be huge. The market on the London Metal Exchange, the LME, is in the grip of what's being termed as a massive short squeeze, which explains some of the rationale of how sharp this price movement has been. Which is holders of substantial short positions are being forced to cover at a time of particularly low liquidity because of what's been going on with the Russian sanctions. Um, Jiang Guangda, who controls the world's largest nickel producer called Tsingshan Holdings Group, is known as the Big Short in China, um, has closed out part of the company's short positions. And apparently then that's been incredibly painful to the tune of multiple double-digit billions of dollars. To give you an idea as well, context again, Russia produces about 17% of the world's top-grade nickel, and this rapid surge in prices is obviously going to have huge cost implications, as I said, for some of those EV manufacturers. Why are people short nickel? Well, traders, nickel producers use short positions to hedge essentially against volatility, long-term contracts or physical, and they've just got caught the wrong side of this trade and it's just happened in a blink and almost like a flash crash. It's really been almost a GameStop-esque type move that obviously someone's going to have to pay the consequence for it. And so far the talk in town is that it's a Chinese company that's going to have to handle and swallow that loss. Then you've got wheat prices as well, continue to trade up higher this morning. We're now talking prices moving towards $14 now. A bushel. And Germany is going to host a special meeting of agricultural ministers from G7 countries later this month to try to assess the impacts and see what can be done to manage that situation. Finally, going back to the metal space, check out gold prices as well. Gold has also mimicked a lot of this general commodity-type move in terms of a flight to quality bid helping the yellow metal shine in these current conditions. And if we look at this on a weekly for gold, You can see here we're right at a strategically important point here in terms of the price action. So in back in 2008, if we were looking at oil, we were down here. Gold really peaked back in 2011. We had the initial peak, um, shortly after a few months from the onset of the coronavirus pandemic, and we're right up at that mark as we speak, looking at gold futures here trading at $2063 at the moment. So oil still rallying as I'm speaking at the moment. Keeping an eye out for Biden shortly, but yeah, it's all going off at the moment in the commodity market. And so yeah, hopefully that update helps. All right, take care, speak soon.
