Commodity prices are on the rise as new Western sanctions against Russia increase the likelihood of supply disruptions, Bloomberg reported.

Wheat rose to nearly its highest level in more than 13 years on Monday, while aluminum hit a record and nickel rose. Gold, which acts as a safe haven during any increase in international tension, is also rising.

The leaders of the G7 countries decided to disconnect some Russian banks from the SWIFT international payment system, as well as to introduce restrictive measures against the international reserves of the Central Bank of the Russian Federation. The introduction of more stringent restrictions exacerbates the deep uncertainty regarding the situation in the commodity market, experts say.

Unless there is a breakthrough in the peace talks, we believe this will lead to a sharp increase in commodity prices as we see demand destruction now remains the only significant mechanism left to balance the market, Goldman Sachs Group Inc. said in a statement.

Although metals and agricultural commodities are not on the radar of Western politicians, prices are rising as investors worry that the latest measures could lead to a sharp drop in payments to suppliers and prompt banks to further cut back on Russian purchases.

Together, Russia and Ukraine account for a quarter of world wheat exports and a fifth of corn sales. Russia is a major supplier of raw materials such as aluminum, nickel, palladium, oil and gas.

The risk of logistical shocks in commodity markets is growing rapidly, with insurers either refusing to provide insurance for ships entering the Black Sea or demanding huge premiums for doing so. Turkey was the largest buyer of Russian aluminum in 2020, ahead of China and Japan, according to UN Comtrade.

Ports in Ukraine are closed and traders say they prefer not to deal with Russian grain. Some exporters are currently refusing to enter into contracts because they do not know if they will be able to fulfill them due to unclear developments in the situation, reports Bloomberg.

Quotes of March wheat futures in Chicago jumped 6.2% during trading on Monday to $8.95 per bushel, according to Trading Economics. Corn futures rose 3.5% to $6.825 per bushel.

Aluminum in London rose 4% to a new record, while palladium climbed 7.8% on fears of potential supply disruptions. Russia produces about 40% of the palladium mined in the world. Prices for silver and platinum changed little.

March contracts on the NYMEX are up 0.7% on Monday to $1,901.1 an ounce.