Commodities markets from agriculture to energy to metals have been upended by Russia’s invasion of Ukraine, as Bloomberg’s index of raw materials is set for the biggest weekly gain in nearly half a century.

The invasion has sent commodity prices soaring as western sanctions force Russia into growing isolation. Banks, importers, and shippers avoid Russian exports as traders price in new fears of shortages in energy, grains, and metals, sending the Bloomberg’s gauge of raw materials to its largest weekly gain since 1974.

The Bloomberg Commodity Index (BCOM), which updates at the end of each session, was up 8.6% on the week as of Wednesday and is set to move higher today.

As the biggest week in commodities unfolds since 1974, the global crude benchmark Brent surged to nearly $120/bbl early Thursday and has since faded to the $110 handle around 0900 ET. Aluminum hit a record high this week, and wheat rallied highest since 2008 as shortage fears increase.

“We’ve never seen such steep and sudden commodity price spikes across so many assets,” said Henning Gloystein, an analyst at Eurasia Group.

“Until there’s significant de- escalation, the record or elevated prices due to sanctions and disrupted supply chains will continue for many commodities,” Gloystein said. 

What’s piqued our interest is that the last time commodities soared this much in a week, members of the Organization of Petroleum Exporting Countries (OPEC) slapped the US with an oil embargo for their decision to re-supply the Israeli military, thus unleashing the oil price shock of the mid-1970s which unleashed stagflation. By the end of the decade, former Fed Chairman Paul Volcker in 1979 began to increase interest rates, and by the time he was done, rates were at 20% by mid-1981 to tame inflation.

The parallels of today’s high inflation and low-growth and soaring commodity prices are eerily similar to the stagflationary period of the mid-1970s. We got more spooky data earlier this week from the Atlanta Fed that slashed its GDP estimate for the first quarter of 2022 to zero as it appears stagflation could be on deck.

Powell has a difficult job to do as the conflict in Ukraine rages, commodity prices soar, and inflation wreaks havoc on households. This is happening in a midterm year that doesn’t look promising for Democrats.