Jakarta, March 1, 2022 - The geopolitical conflict between Russia and Ukraine has given positive sentiment to several commodities, including crude oil and gold. Crude oil prices from oil fields in the United States (WTI) throughout February rose almost nine percent, where in early February oil prices were still at the level of $88.20/barrel soaring to reach the level of $95.72/barrel at the close of February, even oil prices had jumped to touch $100/barrel, the first time since mid-2014.
In addition, as seen from the total transactions of crude oil contracts on ICDX, it increased by 16.98% to 4,415 lots in February. If we look at the period when the Russia-Ukraine conflict started, total crude oil contract transactions jumped by 165.69% in a week. From the conflict between Russia and Ukraine, the market seems to be wary of the impact on the energy sector, because it is feared that there will be disruptions in the supply of gas and oil to European regions that enter through the border region, namely Ukraine.
As a result of the attacks carried out, Russia received sanctions from western countries. The United States (US) limits Russian transactions in Dollars, Euros, Pounds Sterling and Yen. Five Russian banks were also not spared, including state-owned banks, namely Sberbank and VTB. Sberbank, will not be able to make money transfers without any assistance from the US Bank. The sanctions imposed continued to the export sector including electronic goods, computers to semiconductor goods, and aircraft parts.
“The Russia-Ukraine crisis shows that anyone who invests in the securities market should also invest in the commodity market. In such times of crisis, the securities market experiences a downward trend but the commodity market rises. Investing in the commodity market can be a way to manage the risk of a downturn in your securities portfolio. The gold and crude oil commodity contracts available on ICDX can be used by market players to diversify their portfolios and have proven to be performing very well in the last few days,” said ICDX CEO, Lamon Rutten.
The volume of ICDX multilateral transactions in February reached more than 80,000 contracts, and more than 65% of the volume or 52,958 lots were gold contracts. If it is related to the situation in Eastern Europe, since Russia recognized the independence of Donetsk and Lugansk in Eastern Ukraine, which marked the start of the Ukrainian conflict (21/2), gold contract transactions on ICDX recorded a jump of 103.78% to 23,671 lots in a week. This is because many investors turn to safe-haven assets such as gold which causes gold prices to be volatile and tend to rise steadily.
In terms of foreign exchange, the Russian invasion of Ukraine tends to affect the movement of the EURUSD currency pair by 0.71%. The existence of a direct threat from President Vladimir Putin by preparing Russia's nuclear forces on high alert, was responded by various western countries, including the US, European Union, UK by announcing additional sanctions against Russia by deciding to block and exclude several Russian Banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) where the blocking will have an impact on import payment transactions and cash receipts for export. Currently, the market is still waiting for the decision of the meeting between Russia and Ukraine (1/3) which will have an impact on the performance of the Euro currency.