* European gas prices rocket 24%
* Brent crude jumps 8% to seven-year highs
* Chicago wheat hits highest in nearly 14 years
* FACTBOX-Commodity supplies at risk (Updates prices, adds carbon market)
LONDON, March 1 (Reuters) - Commodity prices stormed higher on Tuesday as Russia’s invasion of Ukraine escalated and Western sanctions disrupted air and sea transport, threatening flows of raw materials.
Crude oil hit its highest price in more than seven years, gas prices rocketed 24% and wheat hit its highest in nearly 14 years on fears that logistics problems will result in shortages.
Gold had eased when Russian and Ukrainian officials held ceasefire talks, but it rebounded 1% as safe-haven buying resumed after there was no agreement.
Russia warned Kyiv residents to flee their homes on Tuesday and rained rockets down on Kharkiv as the Russian bombardment of Ukrainian cities intensified.
Worries deepened about logjams in supply chains after several shipping groups halted activity to and from Russia while airlines cancelled cargo flights because of reciprocal airspace bans that hit both Russia and Europe.
“The current situation is highly volatile, with no sign of de-escalation, and the potential for existentially bad outcomes for all parties,” Berenberg analyst Richard Hatch said in a note.
“Our base-case scenario is one ... with demand for commodities remaining strong and prices elevated for those commodities where Russia plays a material role in supply.”
May Brent crude oil futures raced 8% higher to $106 a barrel, the highest since 2014, as concern over supply disruptions outweighed talk of a coordinated global crude stocks release.
Even though sanctions have avoided directly touching Russian oil and gas, worries over disruptions sent Dutch front-month gas prices soaring by 24%.
“The fragile situation in Ukraine and financial and energy sanctions against Russia will keep the energy crisis stoked and oil well above $100 per barrel in the near-term and even higher if the conflict escalates further,” Louise Dickson, senior oil market analyst at Rystad Energy, wrote in a note.
Metals also extended gains on worries over supply of palladium, aluminium and nickel, since Russian production accounts for global market shares of 40%, 6% and 7% respectively.
Palladium spiked more than 9% at one point as analysts said sanctions began disrupting shipments.
Aluminium hovered just below a record high of $3,525 a tonne touched on Monday while nickel also firmed.
Russian aluminium producer Rusal halted production at its Nikolaev alumina refinery in Ukraine, citing logistical challenges.
Supplies of energy-intensive aluminium and zinc could be further disrupted if European smelters decide electricity prices are too high to keep smelters running.
In agricultural markets, Chicago wheat futures jumped more than 5% as traders feared prolonged disruption to global supplies after Ukrainian ports shut.
European wheat marched more than 6% higher while Chicago corn climbed by 5%.
Ukraine and Russia together account for about 29% of global wheat exports, 19% of global corn exports and 80% of world sunflower oil exports.
Malaysian palm oil futures vaulted more than 7% to a record peak on Tuesday on the prospect of rising demand as the closure of Ukrainian ports hits supplies of sunoil from the Black Sea region.
The benchmark European carbon contract, however, plunged 16%, decoupling from the energy markets it usually tracks.
“Spiking gas and power prices are more likely to cause some participants to offload their ... positions to cover losses elsewhere,” Refinitiv analysts said in a report. (Additional reporting by Julia Payne, Susanna Twidale, Mei Mei Chu, Naveen Thukral, Nora Buli and Asha Sistla Editing by David Goodman)
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