Global commodity prices are on track for the biggest weekly rally in more than 50 years and Europe’s natural gas prices have hit a new record, as the war in Ukraine triggers “exceptional moves” in raw materials from oil to wheat.
The S&P GSCI index, a broad barometer for the price of global raw materials, has jumped 16 percent this week, leaving it on track for the sharpest rise on records dating back to 1970, according to Refinitiv data. It is now at its highest level since 2008.
US oil prices also hit the highest level since 2008 on Thursday. Wheat futures in Chicago shot above $12 a bushel. Other commodities including aluminium and coal have also soared this week, in a move that will have profound effects on global businesses and consumers.
“Events in Russia and Ukraine are unleashing exceptional commodity price moves, which could have structural implications on long-term supply . . . but we also believe there are credible threats of demand destruction as commodity prices melt-up,” said Dominic O’Kane, analyst at JPMorgan.
West Texas Intermediate, the US oil benchmark, rose as much as 6 per cent to above $116 a barrel early in the session, while aluminium continued its relentless march higher, hitting another record.
In Europe, wholesale natural gas prices reached almost €200 per megawatt hour while thermal coal — used in power plants — surged beyond $400 a tonne. The huge gains will further push up inflation that central banks are struggling to control, raising the cost of living across the globe.