Oil, gold prices shoot up as Russia-Ukraine standoff deepens

THE deepening crisis between Russia, an energy and metals powerhouse, and Ukraine has added fuel to the fire in a tight commodities market. Worries over supply cuts and sanctions have pushed oil prices to multi-year highs, while a flight to safety in volatile times has led safe-haven gold prices to an eight-month high.

"The oil market has become a fear barometer for the Ukraine crisis. With the diplomatic stand-off intensifying, concerns about energy sanctions, and thus trade disruptions, are growing. The oil and gas trade from Russia to Europe is substantial, and cutting these flows would leave both markets heavily disrupted," said Julius Baer's head of economics and next-generation research Norbert Rücker.

Russia, the world's second-largest oil producer and the second-largest crude oil exporter after Saudi Arabia, serves more than a third of Europe's fuel needs with more than 70 per cent of this oil flowing through pipelines that cross through Ukrainian territory. It is also a major producer of aluminium, palladium, nickel and platinum, which are already experiencing tight market conditions.