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Published on Monday, April 18, 2022

Global | A burgeoning crisis in commodity prices

After 50 days since the start of the Russian invasion of Ukraine, we take a look back at what has happened to commodity prices and offer a few ideas about their likely future trend.

Key points

  • Key points:
  • Oil, for example, went up from an average of USD 70 a barrel in 2021 to USD 140 at the height of the conflict. The prices of some other products, like coal and gas (the latter experiencing a peak rise of 220%, year to date), even hit all-time highs.
  • So far in 2022, the price of many fertilizers has increased by more than two or three times and that of cereals by between 50% and 100%. To this must be added a possible fall in supply in the next six months due to the war.
  • Unfortunately, the war between Russia and Ukraine continues and the uncertainty hanging over commodity markets will remain for the next few months, and in some cases even longer, as investment in them has been low during the last few years.
  • There are consequences that will persist over time and, with the aim of managing the security of supply, we will see changes in global supply chains, elevated inventory levels and the duplication of suppliers — which will keep costs high.
  • A reality that will weigh heavily on the global economy — with a major impact on energy prices in developed economies and a high risk of famine and social unrest in emerging economies: a burgeoning crisis.

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