Against the backdrop of the war in Ukraine, the global stability watchdogs point to weaknesses in the international commodity markets. A significant concentration of firms, banks, stock exchanges and clearing houses in this area carries the risk that possible losses could have an impact on larger areas of the economy, the Financial Stability Board (FSB) said on Monday in a report for the finance ministers of the G20 countries.

The FSB scrutinized commodity markets after regulators expressed concerns that they were unable to get a full picture of this sprawling sector.

As a result of Russia's war of aggression against Ukraine, European natural gas and metal prices doubled, and oil and wheat prices also climbed significantly. This had temporarily led to a sharp increase in margins on the derivatives markets. In some cases, governments were forced to support market participants in financial difficulties with liquidity assistance.

According to the report, however, commodity markets are adapting to this stress. More opaque over-the-counter (OTC) contracts or OTC contracts have gained in importance, as margin requirements are less stringent there. However, this has also made the links between commodity businesses and banks more complex.

"The combination of this concentration and the interconnectedness in the commodity sector – along with large and debt-financed commodity traders, less standardised margin lending practices and the opacity of OTC markets – could combine to lead to an increase in losses," the report said. The FSB coordinates the development of international standards and financial rules in the group of major industrialised and emerging economies (G20).