Commodity markets rattled by MH17 crash

Global commodity markets were gripped this week by the Malaysian Airlines Flight MH17 crash, which has dramatically raised tensions between Russia – a key producer of many raw materials – and the West. The doomed Malaysia jet, which crashed killing 298 people on Thursday, was ‘likely downed’ by a surface-to-air missile fired from separatist-held eastern Ukraine, a US envoy said today. Investor sentiment was already hit by broadened US sanctions on Russian energy, defence and financial firms to punish what Washington charges are violations of Ukraine’s sovereignty. ‘If Russia turns out to have played any part in (Thursday’s) shooting down of a passenger plane over east Ukraine, there is a risk of sanctions being further tightened,’ Commerzbank analysts said in a research note. ‘In this case, it would not only be gas prices in Europe that would react, but also the prices of fuel oil, nickel, copper, aluminium, wheat and palladium – after all, Russia is one of the world’s biggest producers and exporters of these commodities.’ OIL: Crude futures rose following the plane crash, and as Israel pursued a ground offensive into the Gaza Strip. Brent front month futures spiked above $108 per barrel in early trading (on Friday). By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in September rose to $107.66 per barrel from $106.99 for the August contract one week earlier. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for August jumped to $103.72 a barrel from $101.35, according to AFP.