BNR – Oil prices surged on Monday following a weekend rebellion by Russian mercenaries. This has sparked worries over Russia’s political instability and its possible influence on oil supplies.
By 0725 GMT, Brent oil futures rose 56 cents, or 0.8%, to $74.41 per barrel. West Texas Intermediate crude (WTI) in the United States rose 44 cents, or 0.6%, to $69.44 a barrel. In early Asian trading, both benchmarks climbed up to 1.3%.
On Saturday, a conflict between Moscow and the Russian Wagner mercenary militia was avoided. The armed mercenaries retreated from Rostov in southern Russia as part of a settlement that halted their assault on Moscow.
Wagner Rebellion Fuels Oil Price Hike
However, the rebellion has called into question President Vladimir Putin’s grasp on power. It sparked fears of an interruption in Russian oil supplies. Consultancy Rystad Energy said it did not anticipate a major hike in oil prices after the short event.
“We do, however, believe that the geopolitical risk amid internal instability in Russia has increased,” Rystad added.
According to RBC Capital Markets analyst Helima Croft, the market worries that Putin might impose martial law. This restricts employees at loading ports and energy plants from going to work, which could delay the export of millions of barrels.
According to Goldman Sachs experts, markets might price in a somewhat increased likelihood of internal turmoil in Russia resulting in supply interruptions. The impact, however, may be modest as spot fundamentals have not been altered, according to the experts.
For the first time since July 2020, the number of oil and gas rigs operated by US energy corporations dropped for the eighth week in a row.
Brent and WTI prices fell 3.6% last week on fears that the US Federal Reserve may raise interest rates again, reducing demand for oil. It occurs at a time when investors have been disappointed by China’s slow economic recovery.