Piles of unsold industrial metals are growing. Shell has abandoned buying Russian crude oil. The Black Sea is a no-go zone for commercial shipping
Save time by listening to our audio articles as you multitaskToday Russia’s invasion of Ukraine is unleashing the biggest commodity shock since 1973, and one of the worstsince the first world war. Although commodity exchanges are already in chaos, ordinary folk have yet to feel the full effects of rising petrol bills, empty stomachs and political instability. But make no mistake, those things are coming—and dramatically so if sanctions on Russia tighten further, and if Vladimir Putin retaliates.
Such are the consequences of Mr Putin’s decision to drive his tanks across the breadbasket of Europe, and the subsequent isolation of Russia, one of the world’s biggest commodities exporters. Western sanctions on Russian banks have made lenders, insurers and shipping firms wary of striking deals to carry Russian cargoes, leaving growing piles of unsold industrial metals and an armada of vessels full of unwanted Urals crude. Stigma and danger have caused others to stay away.
In the political realm, leaders in the West will have to face furious voters, not least in America’s mid-term elections in November. Remember theprotesters in France in 2018, furious at the cost of petrol. In poorer countries where food and fuel are a larger part of people’s spending, the backlash could be still more violent:in 2007-08 led to riots in 48 countries, and there are already signs of panic and unrest today.
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