Global markets were thrown into turmoil on Thursday as the outbreak of war on European soil pushed up prices of commodities, from oil and gas to wheat, while the stock market plunged.

The ramifications of a potentially protracted dispute involving Europe’s main gas supplier have chilled markets, affecting prices across a wide range of asset classes and investments.

Oil

Brent crude hit $105 a barrel for the first time since August 2014, after rising more than 8% in international energy markets. The increase signaled a further rise on garage forecourts to record unleaded petrol retail prices of over 155p a litre.

Russia is the world’s second largest oil producer and sells most of its crude to European refineries. It is also Europe’s largest supplier of natural gas, supplying around two-fifths of its supply.

Oil prices have jumped more than $20 a barrel since the start of 2022 amid unresolved Ukraine crisis amid fears the US and Europe will impose sanctions on Russia’s energy sector , disrupting supply, should the situation worsen.

Gas

The price of British gas for next day delivery jumped 53% to 326p per therm as the invasion stoked fears of a disruption in global energy supplies. Dutch futures, a closely watched measure for European prices, rose 57% on delivery contracts in March.

Analysts at Investec believe the renewed gas price spike could force energy regulator Ofgem to raise the household bill price cap to £3,000 in October. The 54 per cent rise to almost £2,000 announced earlier this month has already caused major political fallout and triggered warnings to families having to choose between food and heating.

Gold

Generally seen as a safe haven in times of crisis, gold hit $1,950 (£1,460) an ounce at one point before stabilizing, hitting levels near its 2020 all-time high of $2,067 .

Russia and Ukraine are also major producers of important industrial metals such as palladium, nickel and aluminium, which analysts say could be in short supply over the next few months unless war erupts. finish quickly. Russia produces 6% of the world’s aluminum and 7% of its mined nickel. Aluminum rose more than 5% to a record high of $3,466 a tonne in London. Nickel hit its highest level since May 2011 at $25,240 at one point. Palladium, used in catalytic converters for cars, traded more than 5% higher on Thursday afternoon, after touching $2,695.57 an ounce in the morning, up 7% to the highest level since August .

Wheat

Between them, Russia and Ukraine export a quarter of the world’s wheat, Ukraine being known in particular as the “breadbasket of Europe”. Short-term European wheat prices hit record highs on Thursday afternoon. Ukraine is also a major exporter of corn and barley, as well as a key source of cooking oils.

Stock markets

There has been a broad sale of shares across Europe, and banks with large operations in Russia have been particularly affected, such as Austria’s Raiffeisenbank, Italy’s Unicredit and France’s Société Générale, following the measures. taken by governments across the continent and in the UK to impose sanctions. about Russian banks and wealthy Russian individuals.

The FTSE 100 index in London fell 291 points, or 3.8%, to 7,207, while the Dax in Frankfurt lost nearly 4%, the Cac in Paris fell 3.8% and the stock market Italian in Milan closed down 4.1%. On Wall Street, the Nasdaq pared earlier losses and remained flat in the afternoon while the S&P 500 fell 0.9% and the Dow Jones slipped 2%.

Russian shares fell 50% when trading resumed on the Moscow stock exchange on Thursday morning after a temporary suspension. The dollar-denominated RTS index fell 49.93% in early trading, then traded 39% lower. The ruble-denominated Moex index fell 45% to 1,690.13, then 33%.

Thirty-one Russian companies are listed on the London Stock Exchange. State-owned banks Sberbank and VTB, as well as state-backed oil and gas producers Gazprom and Rosneft, have secondary listings in the UK, while their primary listings remain in Moscow.

Sberbank lost 72% of its value, and VTB fell by 4.5%. Gazprom, the mainly state-owned Russian energy company that trades some of its shares in London, fell 30%. Rosneft, the oil major 20% owned by BP, fell 50% and Lukoil 43%. British-Russian miner Polymetal was the biggest loser on the FTSE 100, down 38%, with Russian mining group Evraz in second place, down 30%.

Economic impact

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A prolonged war could put pressure on economies, including the UK, with the cost of living crisis being of particular concern.

Inflation has already hit a 30-year high of 5.5%, but with oil, gas and food ingredients all rising following the conflict in Ukraine, economic analysts warn it could rise further, while growth could also be affected.

Tatiana Orlova, an economist at Oxford Economics, said: “We will factor into our baseline scenario higher gas, oil and food prices in Europe over the medium term, as well as greater disruption in financial markets and tougher EU and US sanctions against Russia. The impact of these changes on our forecast for the global economy is significant, reducing GDP growth by 0.2 percentage points in 2022 and 0.1 percentage points in 2023.”