Economic Sanctions Economy & Business International Markets Macroeconomics Russia Trade Ukraine United States and Canada Western Europe


March 9, 2022

Beyond oil, natural gas, and wheat: The commodity shock of Russia-Ukraine crisis

By Amin Mohseni-Cheraghlou

Russia’s invasion of Ukraine pushed Brent crude oil prices over $130 per barrel on Monday, threatening the fragile post-pandemic recovery of the global economy. Wheat prices are also up by more than 60 percent, increasing the risk of hunger and civil unrest in economies where governments can’t afford to further subsidize bread, and which depend on large amounts of wheat imports from Russia and Ukraine — mainly those in the Middle Eastern, North African, and South Asian regions.

In addition to crude oil, natural gas, and wheat markets, other strategic commodities are also impacted by the Russia-Ukraine crisis. Moreover, Putin’s most recent export ban on raw materials could send ripple effects through the global economy, undermining the global recovery and adding to inflationary pressures.


Around 14 percent of all global coal briquettes exports are sourced from Russia, making it the world’s third largest exporter of this strategic commodity that is used heavily in power generation and energy intensive manufacturing (Figure 2). As of 2020, coal accounted for more than 27 percent of all energy consumption in the world, second only to oil — at 31 percent (Figure 3). More specifically, coal dominates the world’s electricity generation capacity. More than 35 percent of the world’s electricity generation in 2020 took place in coal-fired power plants (Figure 4). While the electricity generation industry in many countries has shifted away from coal to natural gas and renewable energies, coal is still the main fuel generating electricity in large developing and emerging economies, such as China (around 65 percent) and India (around 60 percent). Moreover, many advanced economies — such as the United States — rely heavily on coal for power generation. In 2020, coal was responsible for about one-fifth of all electricity generated in the United States. A prolonged Russia-Ukraine crisis will disrupt the global coal supply, pushing up electricity and overall energy prices and leading to higher costs of economic activity, especially in energy intensive manufacturing industries — namely, steel and aluminum mills. 

Iron and Steel

Russia and Ukraine account for 7.5 percent of global iron and steel exports — Russia ranking 5th with a total of 5.2 percent and Ukraine ranking 15th with a 2.3 percent share of global exports (Figure 5). Iron and steel are central to the functioning of modern societies. They are used in a wide range of industries, from infrastructure, buildings, machinery, and defense, to transportation, appliances, furniture, and many other household and manufacturing items. Hence, disruptions in iron and steel production in Russia and Ukraine could undermine global economic activity.

However, the impact will likely be short lived. There are many other players — including the United States, Japan, Germany, and EU economies — in the global iron and steel industry that could replace Russia and Ukraine in the medium to long-run. However, current iron and steel price jumps would still impact the global economic recovery with potential negative persistent effects in the long run.


In addition to its wide use in coins, nickel is essential to battery technologies. Moreover, because of its resistance to corrosion, nickel is crucial in a wide variety of products ranging from wire, nails, and pipes, to gas turbines and propeller shafts in boats and desalination plants. Accounting for more than 28 percent of the world’s raw nickel exports, Russia is the largest exporter of this strategic commodity, followed distantly by Australia and Canada, which account for 15 percent and 11 percent of global exports respectively (Figure 6). There are no practical alternatives to Russia in the global marketplace for nickel, explaining why the price of this strategic commodity soared dramatically in the past two weeks — significantly more than other commodities.


Closely following Canada, Russia is responsible for 10 percent of global raw aluminum exports (Figure 7). Aluminum is central to transport, manufacturing, machinery, appliances, and furniture industries, all of which would suffer from the aluminum supply disruptions caused by Russia-Ukraine crisis. Similar to iron and steel, however, the aluminum industry has other sizable players — such as Canada, the United Arab Emirates, India, Norway, Australia, and Malaysia which can fully, or at least partially, replace Russian aluminum production in the medium to short-run.

Platinum & Palladium

Russia accounts for 16 percent and 24 percent of platinum and palladium global exports, respectively (Figures 8 and 9). These metals are mainly used in jewelry, dentistry, and electronics — as electrical contacts, and catalytic convertors. Palladium is also used in the semiconductor industry, which has already suffered from supply bottlenecks and demand shocks caused by the pandemic over the past two years. Hence, platinum and palladium supply shocks will disrupt production of a wide range of products, from home appliances and automobiles, to industrial machinery and other electronic gadgets.


Neon is a byproduct of steel manufacturing and is central to the semiconductor industry. Around half of the world’s neon is supplied by Russia and Ukraine, and more than 90 percent of neon used in the U.S. chip industry is sourced from Ukraine. The negative impact of neon shortages on an already ailing semiconductor industry cannot be underestimated. Its ripple effect would reach far across the global economy.

We are two weeks into the worst crisis that Europe has faced since World War II. Most experts anticipate a prolonged period of geopolitical tension with elevated prices and risk premiums across all commodities and foods, especially those directly sourced from Russia and Ukraine. The multifaceted and complex nature of the “largest supply disruptions on record” makes it extremely difficult for the global economy to operate. While we often hear about mobilizing alternative sources of crude oil, natural gas, and wheat to offset the grave impact of the crisis, there is less discussion on other strategic commodities, such as those highlighted above. And, let’s not forget, with 6 million deaths, and nearly half of the world not fully vaccinated, the possibility of further supply chain disruptions because of the pandemic is still on the horizon.

Amin Mohseni-Cheraghlou is a consultant with the GeoEconomics Center and an assistant professor of Economics at the American University in Washington, DC.

At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.

Image: An engineer is walking towards the drilling rig.