According to RMB, Brent crude oil has passed the US$100/bbl mark as it anticipated, with soft commodities also rising. Despite sanctions against Russia, President Putin has ordered attacks on strategic infrastructure across Ukraine. RMB warns that the current tension could have dire consequences on the supply of key exports from Ukraine which range from wheat to petroleum products. “Prices of platinum and palladium are up 3.2 percent and 7.5 percent week-to-date, with concerns of further increases on the back of military action. The generic wheat price index is up 2.5 percent this week,” the investment bank says.
While markets had broadly factored in Russian-Ukraine geopolitical tension, the recent surge in prices suggests that the market may be in flux over the next few weeks, the bank continues noting that the spillover effect on several African countries will be seen primarily through the inflation channel as key commodity prices remain elevated. “We are further concerned on currency volatility as markets divert to safe-haven assets.”