Global
Commodities Markets
Brent Crude Pricing Volatilities 2Q:2014
GEOPOLITICAL EVENTS IN 2Q AND
WHAT TO LOOK OUT FOR IN 3Q
lobal commodities markets have been relatively volatile during the second quarter. Gold
prices have rallied and significant gains made. Fears
of disruptive energy prices increased during this
quarter as the conflict in Iraq (the world’s second
largest OPEC producer) escalated and Ukraine’s
gas supply abruptly cut off by Russia. Growing geopolitical risk could send oil prices sharply upwards
which could pre-empt a more severe market reaction and impact on the global economic recovery.
G
The United States showed signs of being dragged
into the Iraq conflict with President Obama providing what he calls support troops and security
for US personnel. Brent crude pricing reacted of
the events and rose by 0.52% per barrel on June 17
to just below US$113, a US$5 increase from earlier in the month of June. Events in Iraq are set to
impact higher oil prices. Brent crude prices broke
US$125 per barrel back in 2008, 2011 and 2012,
which helped trigger corrections in risk assets.
Gold Pricing Volatilities 2Q:2014
Rice Pricing Volatilities 2Q:2014
Over the past three years, the world has witnessed
cumulative supply disruptions of approximately
three million barrels per day, driven in part by
countries like Libya, Syria and now the current
situation in Iraq. The disruptions in global oil supply will balance itself out as the USA increased its
production to offset any shortfalls and hence the
reason for price stability within the oil markets.
The impact on Sierra Leone is that whenever
geopolitical events cause disruptions in the markets, we normally witness investors exiting equities and bond markets and investing heavily into
traditional safe havens, such as gold. The shortterm effect of geopolitical risk on the market is
therefore quite volatile followed by price hikes.
This could impact on a number of industries in Sierra Leone, the most obvious being petroleum and
energy supply followed by an increase in airfares, sea
freight and local transportation. This could affect
local pricing of basic consumer goods and items.
Steel Pricing Volatilities 2Q:2014