Winners and Losers From Russia’s War, Spike in Oil Prices

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This week:Russia’s war on Ukraine and high oil prices are wreaking havoc in the world of batteries and electric vehicles as well as the broader automotive market. Today, we look at the winners and losers in the chaos.

Anyone paying attention to the growing scarcity of petroleum supplies knew that crude oil was headed to $100 a barrel and more this year—and gasoline prices with it. And weeks before Russia invaded Ukraine, U.S. officials including President Joe Biden told everyone it was coming. But there was no warning before Chinese stainless steel tycoon Xiang “Big Shot” Guangda last week triggered an earthquake in the global market for nickel, a core metal for electric vehicle batteries.

Starting in December, Xiang, a rags-to-riches billionaire known for daring moves that remade the stainless steel industry, began to build up a monstrous short position in nickel. He meant to use it as a hedge against the long-term risks he had assumed with a major nickel mining project in Indonesia. But starting March 7, Western sanctions on Russia triggered investor fears that the supply of Russian nickel—among the largest reserves in the world—could stop. Traders panicked, sending the nickel price up fourfold before the London Metal Exchange halted trading in the metal. Authorities in China and at the LME were attempting to figure out how to unwind Xiang’s short and get trading going again, but despite paper losses of up to $8 billion, he wants to stay with his bet, Bloomberg reported.

The fallout of Xiang’s gambit is the latest evidence of the fragility of commodity supplies, which over the last year have proven to be a vast weak link in the development of the EV industry. Add to that the economic turbulence whipped up by high oil prices, Russia’s war, inflation and general supply shortages, and the result is a reverberation of forces creating winners and losers across the energy and transportation industries, compelling the troubled camp of companies to recalculate their strategies and take on new risks.

Here is why: Oil supplies are likely to remain tight, sending prices higher for at least the medium term. That will amplify the demand for EVs and push up their prices. Among the losers will be automakers such as Ford and General Motors that are relying on the continued sale of gas-guzzling SUVs ...