Global commodity prices are on track for the biggest weekly rally in more than 50 years and Europe’s natural gas prices have hit a new record, as the war in Ukraine triggers “exceptional moves” in raw materials from oil to wheat.

The S&P GSCI index, a broad barometer for the price of global raw materials, has jumped 18 per cent this week, leaving it on track for the sharpest rise on records dating back to 1970, according to Refinitiv data. It is now at its highest level since 2008.

US oil prices hit the highest level since 2008 on Thursday. Everything from wheat to aluminium and coal has also soared, in a move that will have profound effects on global businesses and consumers.

“Events in Russia and Ukraine are unleashing exceptional commodity price moves, which could have structural implications on long-term supply . . . but we also believe there are credible threats of demand destruction as commodity prices melt up,” said Dominic O’Kane, analyst at JPMorgan.

West Texas Intermediate, the US oil benchmark, rose as much as 6 per cent to above $116 a barrel early in the session, while aluminium continued its relentless march higher, hitting another record. Wheat was trading at levels last seen in 2008.

In Europe, wholesale natural gas prices reached almost €200 per megawatt hour while thermal coal — used in power plants — surged beyond $400 a tonne. The huge gains will further push up inflation that central banks are struggling to control, raising the cost of living across the globe.

Russia is a leading global supplier of oil, gas, metals and grains. Western sanctions on Moscow have directly avoided natural resources, which in theory leaves them available for trade, but banks, insurers, shipping companies and trading partners are effectively boycotting the country to reduce legal and reputational risk.

“It is becoming clearer that the Russia-Ukraine conflict is having an impact on the demand for Russian oil,” said Warren Patterson, analyst at ING. “Buyers are increasingly reluctant to commit.” Russia exports 5m barrels of oil per day.

Brent crude rose 3 per cent to $116.28 a barrel before paring gains after the head of the International Atomic Energy Agency said he was heading to Tehran for meetings with senior Iranian officials on Saturday. This raised hopes of a deal with Iran that allow to export more oil.

As a result of the self-sanctioning, traders are rushing to find other sources of supply in markets that are already tight because of rising demand as economies have fired up following the easing of coronavirus lockdown restrictions. That is overturning long-established trade flows and further fuelling inflationary pressures.

“This rally will stoke a torrent of inflationary pressures as the building blocks of the global economy get ever more costly,” said Ehsan Khoman, head of emerging markets research at MUFG. “We believe commodities are now marching to levels where demand destruction — through still higher prices — will become prevalent.

Tom Marzec-Manser, head of gas analytics at ICIS, a consultancy, said that while European buyers with long-term contracts with Gazprom were still drawing maximum gas from Russia under those agreements, some companies with more flexible shorter-term contracts had started to look for alternative sources of supply resulting in a huge increase in demand.

“We are seeing a response to market participants with short-term and medium-term contracts with Gazprom and its affiliates saying we need to remove these from our supply mix where possible and as quickly as possible,” he said.

With exports from Ukraine and Russia at a virtual halt, wheat soared, with Chicago futures at the highest levels since 2008, when a rise in grain prices triggered protests and riots in Africa, Asia and Latin America.

Wheat prices have risen almost 40 per cent this month. Russia and Ukraine account for just under 30 per cent of global wheat exports, sending the grain to countries in the Middle East, north Africa and Asia.

“[The] last time we ran out of wheat we had the Arab spring. When people don’t get their bread they get very angry,” said Cullen Gunn, chief executive of Kilter Investments, a fund manager that specialises in agriculture investments in Australia.

All of Ukraine’s loading ports are closed and, while Russian Black Sea ports are open, vessel traffic has virtually ground to a halt. With many Ukrainian farmers recruited to fight, and fertilisers and pesticides in short supply, there are worries about this year’s crop because the country’s spring planting normally starts next month.

The war in Ukraine has also rattled the coal market, with benchmark coal prices in Asia soaring above $400 a tonne.

“Buyers in markets including Europe, Japan, South Korea and China are scrambling to address their exposure to Russian supply,” said Rory Simington, an analyst at Wood Mackenzie.

Earlier this week shipping companies MSC and Maersk, which handles shipments for Russian aluminium producer Rusal, suspended cargo bookings to and from the country.

Nickel rose more than 5 per cent to an 11-year high of $27,390 a tonne on Thursday.

Additional reporting by Nic Fildes in Sydney