LONDON/Dubai: Talk that Saudi Arabia has its sights on $80-$100 a barrel oil again and of more US sanctions on Russia ignited a rally in commodities and resource stocks on Thursday, though the potential boost to inflation hit fixed-income assets.
It was set to be the strongest day for the commodity complex in eight months as Brent crude futures climbed past $74 a barrel after a near 3 per cent jump overnight.
The surge came on a Reuters report that Opec’s new price hawk Saudi Arabia would be happy for crude to rise to $80 or even $100, a sign Riyadh will seek no changes to a supply-cutting deal even though the agreement’s original target is now within sight.
The Oman oil price (June delivery) too rose by $1.94 to $70.83 per barrel from Wednesday’s $68.89 at the Dubai Mercantile Exchange.
The leap in oil combined with fears that sanctions on Russia could hit supplies of other commodities to light a fire under the entire sector.
Nickel jumped the most in 6-1/2 years on talk Nornickel — the world’s second-biggest producer of the metal — could be impacted.
Aluminium prices reached their highest since 2011, its raw material alumina touching an all-time peak before retreating when Russia floated the idea of a temporary nationalisation of sanctions-hit giant Rusal.
Yields on US two-year Treasuries stood at levels last visited in 2008 at 2.43 per cent and 10-year German yields went above 0.57 per cent for the first time in almost a month. Opec and its partners next meet formally on June 22 but a ministerial monitoring panel will gather in Jeddah, Saudi Arabia, on Friday and are expected to make noises about the broader supply and demand in the oil market.
Resource stocks were the big winners from Thursday’s romp higher in prices. — Reuters/ONA
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