Prices could rise further

Although many commodity prices are already back to levels last seen in 2008, there is still scope for prices to rise further if Western sanctions are extended to cover energy commodities. (At the end of this Weekly Wrap, we publish forecasts in a scenario where Russia is unable to export any commodities.) That said, this week’s rally appears to have been more about “self-sanctioning” as buyers shunned Russian commodities, probably reflecting a combination of fears over future sanctions, a desire not to be associated with Russia or, more simply, the sheer difficulty in sourcing trade financing for Russian deals. Meanwhile, OPEC+ added fuel to the flames at its monthly meeting by dismissing the risks to oil supply as a result of the war in Ukraine. The very brief meeting ended with the group deciding to continue with its incremental increases in supply, despite sky-high prices. All eyes will remain on the Ukraine war and the Western response next week, and what they mean for commodities supply. Talks on a nuclear deal with Iran continued this week, but even if sanctions on Iran are lifted and the country raises exports, it would only partially offset a loss of Russian supply. Drop-In (8 March, 10:00 EST/15:00 GMT): We’re discussing Russian energy imports and Europe’s energy needs in this special 20-minute briefing on one of the big sticking points in the western response to the war in Ukraine. Register here.