Russian Sanctions and Oil

The EU and US followed through and hit Russia with more sanctions in response to the trouble that they are causing in Ukraine. The sanctions on Russia may start to bite and are already impacting many stock and commodity markets across the board.

Palladium was notable as it hit the highest level since 2001 after concerns that sanctions on the world's number 1 producer might impact exports of a commodity where supply is already tight due to labor strife in South Africa.
Oil prices still reeling from a larger than expected drawdown in US inventory is following through on its upside move as the market tries to assess the risk not only from the possibility that Russia may cut gas supply to Europe but also fearing that the return of Libyan oil might not be a sure thing after all. Without a quick return of Libyan oil, other geopolitical risk factors look more dangerous.

The fighting continues in Iraq. CNN is reporting that ISIS now controls land on both sides of the Iraq-Syria border -- opening the floodgates for weapons and fighters between the two countries. Iraqi security forces had to withdraw from central Tikrit after fierce fighting with militants believed to be ISIS members. At least 52 Iraqi security forces were killed.

While there are reports that Israel and Hamas have agreed a five-hour 'humanitarian' ceasefire, after an Israeli navy strike killed four children on a Gaza beach, the New York Times is reporting that a senior Israeli military official said the likelihood of an invasion was "very high".

Gold is rising even after a pair of massive sell orders designed to have a maximum impact on price seems to be giving way to strong demand number from India and China.  As reported by Bloomberg News gold imports by India jumped 65 percent to $3.12 billion in June from $1.89 billion a year earlier, after the central bank allowed more banks and traders to buy bullion overseas, the Commerce Ministry said yesterday. In China, which surpassed India last year as the biggest consumer, volumes for the benchmark spot contract in Shanghai rose for a second day yesterday to a one-week high of 13,421 kilograms.