Nickel prices are soaring amid growing concern about the availability of supply from Indonesia and Russia, the top two producers of the metal.

The price of the industrial metal, which is used to make steel stronger and more resistant to corrosion and extreme temperatures, hit a 14-month high on Thursday, bringing year-to-date gains to 29%.

Driving up prices in the $25 billion nickel futures market is a supply shortfall caused by a recently introduced export ban in No. 1 producer Indonesia, analysts and investors say. Further adding to the worry about global supplies is the situation in Ukraine: Some traders fear that nickel miners in Russia, which ranks second in terms of output, could face sanctions if tensions escalate. Together, the two countries account for more than a third of world nickel output.

If the export ban isn’t quickly resolved, analysts and investors expect supplies of the metal to fall short of global demand for the first time since 2010. Tensions regarding Indonesia and Russia have put the nickel market on a different footing than that of many other industrial metals, such as aluminum, where supplies are more plentiful.

With no end in sight for either situation, “the nickel market has started to panic,” said Patricia Mohr, a commodity market specialist at Scotiabank.

Nickel for delivery in three months rose 0.3% on Thursday to $17,925 per metric ton on the London Metal Exchange, the highest price since February 2013. Metal markets were closed on Good Friday.

Indonesia, the world’s largest nickel producer, hasn’t allowed any exports of unprocessed nickel ore in three months. In January, the country banned exports of nickel ore and other raw commodities in a bid to broaden its economy by forcing miners to perform the lucrative task of refining their metal inside the country. Miners argue that the sprawling nation lacks the infrastructure to economically produce finished metal.

Many traders and investors had anticipated a quick fix—a repeal or relaxation of the export ban by the government—but Indonesia has held firm. Barring a resolution in the near term, supplies of the metal won’t be enough to meet demand for the rest of the year. Barclays PLC analysts estimate the market was in surplus in the first quarter, but will see a deficit of 27,000 tons over the rest of the year, and a deficit of 111,000 tons in 2015.

China, which consumes nearly 50% of the world’s nickel, started stockpiling the metal well ahead of the export ban. The country’s stockpiles could be depleted by this fall unless Indonesian exports resume, Ms. Mohr said.

“If we continue to see drawdown of the inventories that the Chinese are holding, you could get quite an explosive environment in nickel prices,” said Jeremy Baker, portfolio manager at the $732 million Vontobel Belvista Commodity Fund in Zurich.

Mr. Baker said his fund was holding bullish bets on nickel futures. He said prices between $22,000 and $23,000 a ton are “not out of the question in the months ahead.”

Also sending nickel prices higher are the threat of economic sanctions against Russia as its conflict with neighboring Ukraine intensifies. The U.S. and European Union announced measures targeting some Russian officials last month as Russia moved to annex Crimea. Sanctions targeting whole industries—including mining—may be on the table if Russian troops move into Eastern Ukraine, analysts say.

“Producers in Russia tend to use bank credits, and some of them have significant loans with Western banks,” said Bart Melek, head of commodities strategy at TD Securities. “Should sanctions tighten up, they would find it hard to source equipment and get cash for operations.”

Pro-Russian activists in eastern Ukraine said Friday they won’t vacate the government facilities they have occupied despite a compromise agreement struck a day earlier that called on them to leave.

To be sure, the rally in nickel prices could quickly fall back if Indonesia relaxes its ban or the conflict over Ukraine cools. However, analysts say Indonesia is unlikely to back down from its demands as the country prepares for legislative and presidential elections later this year.

“The government has already invested so much into this ban, and they are unlikely to back down,” said Shaun Levine, a senior analyst at Eurasia Group. “The pressure here is really on the miners.”

• [Editor:Juan]