(Bloomberg) — Oil rose as investors weigh the potential for more civil unrest in Russia after the dramatic but short-lived mutiny in the top OPEC+ producer over the weekend.
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WTI traded above $69 a barrel and Brent rose, although both benchmarks pared earlier gains by more than 1%. A strange calm prevailed in Moscow after the end of the uprising led by Yevgeny Prigozhin, head of the Wagner Mercenary Group, while the financial markets were relatively quiet.
“Crude oil has so far shown the usual default reaction to turmoil or uncertainty in a major producing country,” said Vandana Hari, founder of Singapore-based Vanda Insights, adding that price gains were unlikely to last. “There should be no impact on Russian oil and gas supplies.”
Russia is a major producer of the OPEC+ alliance, along with Saudi Arabia, and any prolonged turmoil in the country could reverberate through global oil markets. The country’s war in Ukraine has already upended trade flows, with major consumers in Asia including China boosting Russian energy imports.
Goldman Sachs said the impact on oil prices in the aftermath of the armed uprising in Russia could be limited because markets often focus on unchanged immediate fundamentals. However, RBC Capital Markets LLC said that the risk of further civil unrest “must be taken into account in our analysis of oil.”
Oil in New York is still down about 13% this year, due in part to the resilience of Russian exports, along with strong monetary tightening from the US Federal Reserve and a lackluster economic recovery from China. Recession alarms are also ringing around the bond market in Europe.
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