Reuters reported that oil prices surged on Monday, June 26, after a weekend mutiny by Russian mercenaries heightened fears about political instability in Russia and its influence on oil supplies from one of the world’s top exporters.
After jumping 1.3% in early Asian trade, Brent and WTI futures were up 0.4% for Monday. At 0234 GMT, Brent was up 27 cents at $74.12, while WTI was up 28 cents at $69.44.
On Saturday, Russian mercenary outfit Wagner withdrew from Rostov, preventing a showdown with Moscow.
The challenge has prompted fears about Russian energy supplies and President Vladimir Putin’s control.
In a late Sunday statement, Rystad Energy said it did not expect oil prices to rise due to the “short-lived event.”
Believe that the geopolitical risk amid internal instability in Russia has increased,”
RBC Capital Markets analyst Helima Croft worried that Putin might declare martial law, barring employees from arriving at major loading ports and energy plants and blocking millions of barrels of exports.
“It is our understanding that the White House was actively engaged yesterday in reaching out to key domestic and foreign producers about contingency planning to keep the market well supplied if the crisis impacted Russian output,” she wrote Sunday.
Goldman Sachs analysts said markets may price a little increased likelihood that Russian internal turbulence disrupts supply. Analysts noted that spot fundamentals have not altered, limiting the effect.
Last week, Brent and WTI fell 3.6% on concerns that the U.S. Federal Reserve’s interest rate hikes could reduce oil demand at a time when China’s economic recovery has disappointed investors after several months of weaker consumption, production, and property market data.
“China’s economic growth has been a nightmare for commodity markets, particularly oil and industrial metals,” CMC Markets analyst Tina Teng said.