Uranium prices rose to heights not seen in over a decade during the first week of April, fueled by another bout of investor buying as well as mounting concern over a potential supply crunch on the spot market.

The S&P Global Platts assessed uranium spot price reached $63.13 per pound on April 7, 48.2% more than the Jan. 3 price. Over the past two years, uranium prices have rebounded from as low as $24/lb in 2020. Buying activity from Canadian investment fund Sprott Physical Uranium Trust Fund had pushed up prices in 2021, and prices took off in the wake of economic sanctions against Russia, a major uranium producer.

Russia's invasion of Ukraine has made it a pariah to many countries around the world. Nuclear utilities have responded by looking for new supply outside of Russia's orbit, industry experts said.

"The world will bifurcate between two areas: China, Russia and Kazakhstan on one side, and on the other, the West, which will be Canada, Namibia, France and the U.S.," Nick Lawson, CEO of U.K.-based advisory firm Ocean Wall and uranium expert, said in an interview. "That's going to be the new world order in terms of uranium."

Russia produces about one-fifth of the world's supply of enriched uranium, according to the Nuclear Energy Institute, a trade association of U.S. nuclear power utilities. Uranium is mined and then processed into an intermediate form known as yellowcake or U3O8. It then needs to be enriched before being put to use at a nuclear power plant.

U.S. lawmakers have toyed with proposals to impose sanctions on Russian state-owned uranium company Rosatom or to adopt an export ban on Russian nuclear fuel since the country's invasion of Ukraine in February, but they have yet to follow through.

"There are continued concerns over potential further sanctions on Russia that will reduce or cancel deliveries of enriched uranium into the U.S. or EU, and that is also supporting further investor activity and limited supplies of spot uranium in the market as potential sellers hold off from offering material, at least not at lower price levels," said Jonathan Hinze, president of UxC LLC, a uranium analysis platform.

After roughly a decade of dormancy, the uranium market has awakened to a price landscape reminiscent of the period between 2006 and 2007, when market conditions caused prices to eclipse $130/lb.

This year, hedge funds are getting in front of the utilities and buying up yellowcake on the spot market, taking up the slack that held prices down for years.

Investor buying from the Sprott Physical Uranium Trust fundraised "significant new cash" during the first week of April, Hinze said. "It appears that the ongoing rise in commodities overall is leading investors to give more money to [Sprott Physical Uranium Trust]," Hinze told Commodity Insights.

As of April 7, Sprott reported having a total net value of $3.43 billion and 54.3 million pounds of U3O8 in its trust, up from 47.5 million pounds recorded on Feb. 25. Sprott jolted the market soon after Russia's incursion into Ukraine by buying 1.4 million pounds of U3O8 on Feb. 25, the trust's biggest day of buying in 2022.

Uranium investors are closely watching recent announcements by France and others to build more nuclear reactors as countries eye nuclear power as a viable, low-carbon solution for generating power.

"Utilities must now be beginning to worry," Lawson said. "Inventory levels are getting perilously low for these uncertain times."

"Imagine that you have been in a buyers' market from 2011 to 2022," Lawson added. "The utilities have always been able to go and dip into the spot market and buy uranium. That has now completely changed."

The Nuclear Energy Institute did not immediately respond to a request for comment.

S&P Global Platts is an offering of S&P Global Commodity Insights. S&P Global Commodity Insights is owned by S&P Global Inc.