Escalating tensions in Eastern Europe over Russia’s looming invasion of Ukraine as well as prospects of sanctions against Russia are fueling fears of supply shocks in the commodity markets. After several weeks of joint military drills ended last week, Russia was supposed to start pulling back troops, but that is currently not happening, with as many as 190,000 Russian troops still camping out on Ukraine’s border and Belarus confirming that 30,000 of them would stay in the country indefinitely.

Last-ditch diplomacy doesn’t appear to be working either: in a bid to avert the biggest war in Europe since 1945, French President Emmanuel Macron took to the phone over the weekend and managed to arrange a meeting between Vladimir Putin and President Biden. However, the US only agreed to the summit “in principle,” meaning it’s conditioned on Moscow holding off on an invasion. Russia appears to be continuing preparations for a full-scale assault on Ukraine, with president Biden’s administration warning that an invasion could happen any time now.

US lawmakers have said they are devising the “mother of all sanctions”against Russia as a method of defending Ukraine that would be “crippling to [the Russian] economy.”

Here are 5 key commodities that are likely to be hardest hit if Russia invades Ukraine.

#1. Aluminum

Russia accounts for ~6% of global aluminum supply, and an escalation of tensions between Russia and Ukraine raises the likelihood of a supply shock in an already tight aluminum market.

According to the US Geological SurveyRussia made roughly 3.7 million metric tons of aluminum in 2021, with world production of the metal amounting to about 68 million metric tons. Data by CIA World Factbookshows that China is the world’s biggest aluminum producer, making about 39 million metric tons in 2021, but Russia is also a large exporter of the commodity.

Aluminum prices have risen about 15% year to date, with prices near multiyear highsbut could still rise further. Jefferies analyst Christopher LaFemini says that even if geopolitical risks in Europe subside, aluminum prices probably would decline at first before rising again as the market deficit likely would persist.

Meanwhile, shares of one of the world’s largest aluminum producers Alcoa Corp. (NYSE:AA) have jumped 270% over the past year and 31.3% YTD. LaFemina has raised his price target to a Street-high $90 from $75, good for 15% upside, while reiterating his Buy recommendation on escalating fears that reduced supplies from Russia.

#2. Oil

Russia is an oil and gas powerhouse, with the country pumping about 9 million barrels of crude oil a day. In comparison, the US pumps about 11.6 million barrels while global oil production runs to roughly ~96 million barrels per day.

Benchmark international crude oil prices are up about 20% year-to-date to trade near seven-year highs, with the oil markets facing supply headwinds.

OPEC+ has been setting a high bar for itself, boosting production quotas by 400kb/d each month since mid-2021. The group has consistently missed budgets, and there are signs that things are getting worse. The “OPEC 10,” countries within OPEC but excluding Venezuela, Libya and Iran, were budgeted to increase production by 254kb/d in January, with the remainder of the 400kb/d quota allocated to Russia and others. Official results released a few weeks ago indicate that OPEC 10 had increased production only 135kb/d, and now sits a full 748kb/d below self-imposed quota levels.

Outside of the core 10, Libyan and Venezuelan volumes fell while Iranian volumes increased. In total, the three countries saw volumes fall 33kb/d month on month. Meanwhile, Russian volumes for January increased 85kb/d, compared to the country’s budgeted 100kb/d increase.

In a break from recent history, there doesn’t appear to be a strong supply response to rising prices and declining inventories. When Chevron (NYSE:CVX) reported Q4 results two weeks ago, the company guided the street to flay YoY production in 2022. Exxon (NYSE:XOM) did the same, as did BP (NYSE:BP) and ConocoPhillips (NYSE:COP).Bakken producer Whiting (NYSE:WLL) announced they plan to increase capex 55% in 2022 and acquire assets to generate only ~3% production growth. Driller Nabors(NYSE:NBR) reported earnings Tuesday and indicated they don’t expect to add any rigs outside the US in Q1.

Veteran strategist David Roche has predicted that oil prices will “certainly” hit $120 a barreland the global economy will be “radically altered” if Russia invades Ukraine.

#3. Natural Gas

Russia is a leading producer of natural gas, pumping about 639 billion cubic meters of natural gas in 2021, or nearly 17% of global production of 3.854 trillion cubic meters as per BP data.

European natural gas prices have hit new highs after a pipeline that brings Russian gas to Germany switched flows to the east. Westward gas flows through the 2,607-mile-long Yamal-Europe pipeline, one of the major routes for Russian gas to Europe, have been gradually falling, a move the Kremlin says has no political implications.

Some western politicians contend that Russia is using its natural gas as a weapon in the political tussle tied to Ukraine, as well as delays in the certification of another controversial pipeline, Nord Stream 2. Russia, of course, has denied any connection.

In the event that Russia’s gas supplies to Europe dry up, US gas producers are likely to step in to supply Europe with liquefied natural gas, which would imply a large increase in demand and potentially cause a quick reduction of domestic inventories of natural gas.

The United States is set to become the world’s biggest liquefied natural gas (LNG) exporter in the current year, surpassing Qatar and Australia over the course of the year once the new LNG liquefaction units, called trains, at Sabine Pass and Calcasieu Pass in Louisiana are placed in service by the end of the year.

Global LNG demand has hit record highs each year since 2015, thanks in large part to surging demand in China and the rest of Asia. Much of that global appetite has been steadily met by rising US LNG exports, which have reached new records every year since 2016, a trend that appears set to continue.

#4. Copper USGS data shows that Russia produced 920,000 tonnes of refined copper in 2021, about 3.5% of the world total, out of which Nornickel produced 406,841 tonnes.

UMMC and Russian Copper Company are the other two major producers, with Asia and Europe being Russia’s key export markets.

Prices of green metalsincluding copper, are projected to reach historical peaks for an unprecedented, sustained period in a net-zero emissions scenario. Copper prices are sitting at all-time highs thanks to surging demand, especially in developed countries, with increasing usage in electric vehicles and wind farms, solar panels and the power grid, combined with tight supply.

Benchmark copper prices on the London Metal Exchange are currently sitting at $10,100 per ton, not far removed from its May 2021 all-time high of 10,724.50 per ton.

Copper is being billed as the new oil, with the ‘green’ shift in the post-COVID economy supporting higher demand for copper and other base metals since EVs use about 4x more copper than gasoline-powered vehicles. The International Copper Association estimates that the The rapid rise of EVs will raise copper demand in EVs from 185,000 tonnes in 2017 to 1.74 million tonnes by 2027.

Source: International Copper Association

Copper is indispensable to infrastructure builders and is mainly used to make electric cables. In fact, copper is known for its uncanny ability to predict the health of the world economy.

Goldman Sachs estimates that copper demand will grow nearly 600%, to 5.4 million tons by 2030, thanks mainly to the green transition.

Another factor driving copper prices: Tightening supplies.

According to Goldman, the market could face an 8.2m ton supply gap by 2030, with new mine development being limited for the past decade as mining companies remain cautious about doubling down on new developments amid rising costs. Quite frequently, promising mines are located in locations that are difficult to access by large equipment. Further, as is common with many metals, developing copper mines requires long lead times, while environmental concerns make it increasingly difficult to acquire mining permits.

In a recent noteGoldman says that copper prices are poised to grow as demand outpaces supply since the concentrate market is very tight, particularly in China. The bank has a 3-month a 12-month price target of $11,500 per tonne.

Sanctions on Russia are likely to lead to even tighter supply and another short-term rally.

#5. Cobalt

According to data from the US Geological Survey (USGS), Russia produced 7,600 tonnes of cobalt last year, more than 4% of the world total.

However, Russia was a distant second to the Democratic Republic of Congo which produced 120,000 tonnes. Nornickel (GMKN.MM) is the largest producer in Russia, selling 5,000 tonnes in 2021. Nornickel sells most of its output to Europe. Nornickel is also the world’s top producer of refined nickel, producing 193,006 tonnes in 2021 or about 7% of global mine production, estimated at 2.7 million tonnes. The company sells to global industrial consumers under long-term contracts.

After climbing more than 90% in 2021, mainly due to supply chain issues, cobalt prices are expected to stabilize in 2022, especially with EV makers like Tesla Inc. (NASDAQ:TSLA) and manufacturers in China popularizing lithium iron phosphate (LFP) battery chemistries.

In a recent note, S&P Global Platts said cobalt prices are set to fall 8.3% in 2022 as supply chain bottlenecks ease. Sanctions on Russia are, therefore, unlikely to have a major impact on cobalt prices.