Political unrest in Russia triggers oil prices

Barrel Oil


  • The price of oil rises due to concerns about political instability in Russia and its possible impact on the global oil supply.
  • The tension between Moscow and the Russian mercenary group Wagner raises uncertainty about President Putin’s control and potential disruptions in oil supplies.
  • China’s economic problems and possible interest rate hikes by the US Federal Reserve also affect oil markets.

Oil prices rose in early Asian trading on Monday after a failed mutiny attempt by Russian mercenaries over the weekend raised concerns about political instability in Russia and the potential impact on oil supplies from one of the world’s largest producers.

Brent crude futures were up 95 cents, or 1.3%, at $74.80 a barrel by 2300 GMT on Sunday. US West Texas Intermediate (WTI) crude settled at $70.04 a barrel, up 88 cents, or 1.3%.

Escalation of Tensions in Russia: The Challenge to political stability

On Saturday, Moscow and the Russian mercenary group Wagner avoided a conflict after the heavily armed mercenaries withdrew from the southern Russian city of Rostov under a deal that halted their rapid advance on the capital.

The challenge has raised questions about President Vladimir Putin’s grip on power and concerns about a possible disruption of Russian oil supplies.

Effects on the global oil market

RBC Capital Markets analyst Helima Croft said there were concerns that Putin would declare martial law, which would prevent workers from going to major cargo ports and energy facilities, potentially halting millions of barrels of exports. She added in a note on Sunday:

“It is our understanding that the White House was actively engaged yesterday in reaching out to major domestic and foreign producers about contingency planning to keep the market well supplied if the crisis impacts Russian production. “

Goldman Sachs analysts indicated that markets may price a moderately higher probability that volatility in Russia will lead to supply disruptions or have a significant negative impact on oil supplies in the future.

However, the impact could be limited because spot fundamentals have not changed and any hit to financial risk sentiment or oil demand from increased uncertainty could provide a balance, Goldman Sachs analysts added in a statement. note.

On the other hand, both Brent and WTI fell around 3.6% last week on concerns that further interest rate hikes by the US Federal Reserve could weaken oil demand at a time when China’s economic recovery has also disappointed investors after several months of weaker-than-expected consumption, production and housing market data.

CMC Markets analyst Tina Teng commented in a note.

“China’s economic growth has been a nightmare for commodity markets, particularly in oil and industrial metals.”