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Commodity markets: shocks and spillovers

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  • Fernando Avalos
  • Wenqian Huang

Abstract

Dislocations from the Russia-Ukraine war have buffeted commodity markets from both the financial and real sides. We argue that a substitution of Russian oil exports would be difficult, implying that restrictions on these exports may result in large and persistent price increases for oil-related products. Surging oil prices may be partly moderated by an increased use of biofuels, but this in turn could push up the prices of the staple crops that are biofuel feedstocks. In addition, persistently high prices for natural gas, key for electricity generation, could extend the recent electricity price hikes for final users – a strong headwind for all economic activity, especially industrial production.

Suggested Citation

  • Fernando Avalos & Wenqian Huang, 2022. "Commodity markets: shocks and spillovers," BIS Quarterly Review, Bank for International Settlements, September.
    • Handle: RePEc:bis:bisqtr:2209b
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    References listed on IDEAS

    as
    1. Fernando Avalos & Marco Jacopo Lombardi, 2015. "The biofuel connection: impact of US regulation on oil and food prices," BIS Working Papers 487, Bank for International Settlements.
    2. Avalos, Fernando, 2014. "Do oil prices drive food prices? The tale of a structural break," Journal of International Money and Finance, Elsevier, vol. 42(C), pages 253-271.
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    Cited by:

    1. M.R. Malefane, 2023. "Economic implications of external monetary policy shocks for Lesotho: An empirical investigation," Journal of Economic Policy and Management Issues, JEPMI, vol. 2(2), pages 65-75.
    2. Roman Kopych & Viktor Shevchuk, 2023. "Time-Varying Impact of Commodity Prices on Output Growth and Inflation in the Eastern European Countries," Commodities, MDPI, vol. 3(1), pages 1-17, December.
    3. Ahmed Mohamed Habib & Umar Nawaz Kayani, 2024. "Price reaction of global economic indicators: evidence from the COVID-19 pandemic and the Russia–Ukraine conflict," SN Business & Economics, Springer, vol. 4(1), pages 1-21, January.
    4. Richhild Moessner, 2025. "Effects of Energy Prices on Food Consumer Price Inflation," CESifo Working Paper Series 11682, CESifo.
    5. Xue, Huidan & Du, Yuxuan, 2024. "Spatial Price Transmission and Dynamic Volatility Spillovers in the Global Grain Markets," 2024 Annual Meeting, July 28-30, New Orleans, LA 343639, Agricultural and Applied Economics Association.
    6. Tong, Eric, 2024. "Repercussions of the Russia–Ukraine war," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 366-390.

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    More about this item

    JEL classification:

    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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