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As Russia begins invasion, these strategic commodities will benefit the most - Phil Streible

Kitco News

Russia is a key supplier of not just oil but several strategic commodities, all of which should benefit from heightened geopolitical tensions in Eastern Europe, said Phil Streible, chief market strategist of Blue Line Futures.

Streible’s comments come as The White House on Tuesday called Russia’s latest advances “the beginning of an invasion.”

Russian President Vladimir Putin announced that he recognizes the territorial claims of two self-declared separatist republics in eastern Ukraine and has deployed troops to those regions.

The U.S. and the U.K. have moved ahead with sanctions; U.S. President Joe Biden announcing Tuesday that the first wave of sanctions will target Russian banks and sovereign debt. Biden vowed tougher punishments if Russia continues its aggression.

“What [the Russians] would do is they would divert their oil. Instead of selling it into the current export structure that they have, they could easily make agreements with other countries to buy that oil, like China. Also, they can take off some of that oil, they can hold back. There’s no reason for them necessarily to sell, they have too many other key commodities that prices can drive up on,” Streible told David Lin, anchor for Kitco News.

With the supply of oil and gas crunched, crude oil prices could spike to north of $100 a barrel, up to $120, Streible said.

“You’re also going to see with that Nordstream 2 pipeline halted, which affects mainly natural gas…people are out there trying to secure any type of energy they can, especially heating-related energies. So, we really believe that tailwind for crude oil up to $100, it’s all built in there,” he said.

Other strategic metals that will get further tailwinds are palladium, copper, and cobalt, he said.

“[Russia] is the number two producer of platinum, number one producer of palladium, they are the number three wheat producer,” Streible said. “Look at a chart of wheat. It has broken out to the upside, it is up about 4.85% year-to-date as of this reporting right now, and it is blowing away all the other grains that are out there. They produce 3.5% of the word’s copper. With EV demand increasing, copper is one of the main components out there…and they produce 4% of the world’s cobalt, which are used in those batteries for EVs. So, Russia is a very strategic country when it comes to commodity production, commodity exports, and the direction of the global economy.”

For more information on how gold would respond, watch the video above.

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