The turmoil unleashed in commodity markets by Russia’s invasion of Ukraine worsened on Monday as LNG orders were paused, finance for trade in raw materials dried up and Black Sea wheat sales froze.
As tougher U.S. and European sanctions threaten to partly cut Russia off from the global financial system, disruptions to shipments of raw materials from palladium to wheat mounted. Buyers also paused purchases of Russian liquefied natural gas as they awaited clarity on restrictions against banks and companies. The cost of shipping the nation’s raw materials is soaring, while the fallout is reverberating from London to Hong Kong as international investors ditch Russian commodities assets.
The immediate focus is on disruption to Black Sea trade, which includes millions of barrels of oil a day and about a quarter of the world’s grain exports. While Russian raw materials were so far exempted from sanctions, the threat of a severe dislocation to flows will increase as the conflict escalates.
