Unprecedented natural gas reserves in Europe, record global grain output and the threat of mutual economic calamity from oil sanctions are cushioning commodity prices even as the Ukraine-Russia conflict spurs a gold rally.
While U.K. gas prices, a European benchmark, rose 3.6 percent since the crisis began at the end of February, they are still the lowest for this time of year since 2010. Brent crude fell 1.3 percent. After wheat advanced 13 percent and corn 3 percent, both remain about a quarter below the peaks in 2010, the last time Russia and Ukraine curbed shipments. Gold reached a six-month high today as demand for a haven grew.
Abundant supply is limiting some price swings caused by Russia’s incursion into Crimea, where a majority in a disputed vote yesterday chose to join Russia, preliminary results show. Europe gets about a third of its gas from Russia, half of it through Ukraine, and about the same proportion of crude. Russia’s economy has slowed for three years, increasing its reliance on the export revenue. Sanction talks in Europe have focused on asset freezes and visa bans rather than energy.