Going Up: Oil, Wheat, and Bitcoin Spike Amid Russian Invasion
Oil Prices at Seven-Year Highs
Russia’s invasion of Ukraine comes amid an already tight global oil market. Demand that cratered during the pandemic has rebounded, and supply has not kept pace. The ensuing rise in prices has been accelerated by the armed conflict. Any disruption in Russian oil delivery would have a big impact, as the country produces around 10% of the world’s supply.
As Russia invaded last week, oil prices around the world topped $100 a barrel. This week Canada became the first nation to ban Russian oil imports. Analysts say some lenders are shying away from the financing of commodities trades, which could disrupt oil deliveries and send prices even higher.
Wheat Prices Highest Since 2008
Grains like wheat and corn are massively important raw materials for food producers, and they’re also part of the conflict’s economic story. Russia is the world’s largest exporter of wheat, and Ukraine is within the top four.
As Russia’s invasion advanced, wheat futures hit 984 cents a bushel — the highest price in a decade. The price spike was so extreme on Tuesday that wheat futures traded at “limit up,” which refers to the largest price increases regulators allow during one trading day. Corn futures also hit their highest level since May.
Bitcoin and Crypto Pop
As the US and its allies enacted sanctions against Russia and its central bank, cryptocurrency prices began to rise. CoinDesk shows Bitcoin (BTC) jumped 13% over a 24-hour period earlier this week, while other digital coins saw a similar spike. Ethererum (ETH) rose 10% on Tuesday, while Dogecoin (DOGE) jumped 6%.
Analysts say there’s a distinct possibility Russian interests are utilizing digital currency as a way to get around economic sanctions. Bitcoin and other assets traded on the blockchain can’t be traced like dollars and euros. Investors who saw the Russian ruble tanking may have also shifted assets into digital currency. The rising prices attributed to Russia’s invasion clearly involve both traditional market dynamics, and more modern trends.
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