Global Commodity Markets Face Volatility

European and G7 nations may face higher crude prices as Russian oil production is set to decrease by 500,000 barrels per day this month. Russia refuses to sell oil to countries adhering to a $60-per-barrel price cap, which includes Australia, G7 nations, and the EU. This cap and the announced production cuts have pushed Brent prices up 2.2%, to around $86 per barrel.

Despite Europe reducing its demand for Russian oil since the Ukraine conflict, Russian oil exports have grown by 7.2% in 2022, primarily due to markets like India. The US market may be less affected by the potential crude export spike, as the Energy Information Administration predicts that domestic crude production could increase to 12.49 million barrels per day.

However, American copper demand may outpace supply by 2035, driven by EV batteries and renewable energy applications. Producers like Highland Copper plan to increase production, while Chinese copper consumption is expected to rise throughout March, driving procurement.

Uncertainty around the Black Sea Grain Initiative could push maize, corn, wheat, soybean, and sunflower oil prices higher. Ukrainian exports of these grains have dropped 27% for the 2022-23 season due to logistical challenges amid the ongoing conflict. Concerns about drought in Argentina may further increase soybean and corn prices, although Brazil and the US have better-than-expected soybean cultivation projections.

In Ukraine, prices for wheat, corn, and sunflower oil have returned to pre-war levels but remain elevated due to supply chain disruptions. However, wheat, barley, and sunflower oil have not yet reached pre-war levels.