Market Minute: The War on the Nuclear Supply Chain Escalates

Over the weekend, the Russia-Ukraine conflict gained greater attention due to several developments that could escalate tensions and directly impact various markets, particularly energy and uranium. 

Back in late September, I wrote an article titled “Mutually Assured Disruption in Nuclear Supply Chain” that highlighted the risks of Russia curbing uranium exports to the U.S. and other Western countries in retaliation for expanded strikes on Russian territory. Russia currently supplies approximately 20-35% of the enriched uranium used in U.S. nuclear reactors to generate electricity. 

On Friday, Russia announced a temporary limitation on enriched uranium exports to the U.S. While this move will not have an immediate impact on supply—unlike disruptions in oil or natural gas—it could create significant challenges for the U.S. by mid to late 2025, as most power companies secure their uranium needs well in advance. 

This development could provide a significant tailwind for companies like Cameco Corporation (CCJ), which may experience an increase in orders and potentially capitalize on higher prices due to heightened demand. However, it could also hinder the Small Modular Nuclear Reactor (SMNR) industry, which has recently garnered attention as a promising solution for powering data centers and AI projects. Many of these SMNR companies are still in the early stages, receiving initial orders and remaining pre-revenue. 

If geopolitical risks continue to escalate or uranium supply restrictions become a cornerstone of Russia-U.S. policy, these constraints could discourage companies from pursuing nuclear energy and drive them to explore alternative power solutions. 

Another significant development over the weekend was the U.S. approval for Ukraine to use long-range missiles. This news dominated headlines and has the potential to impact energy markets once again. Natural gas prices climbed overnight, while crude oil saw modest gains. 

Energy stocks, particularly those with exposure to liquefied natural gas (LNG), as well as uranium-related stocks and ETFs may see heightened volatility over the coming week. As the situation evolves, these sectors may continue to experience heightened volatility and trading opportunities.