Mikhail Svetlov/Getty Images/Contributor
- Oil prices spiked more than 1% on Sunday after the Wagner Group's attempted mutiny.
- Analysts say oil prices could continue to gain on the geopolitical risks in energy giant Russia.
- Historically, such events in major oil producers have increased prices by an 8% in the five days after they started, wrote Rystad Energy's Jorge Leon.
The Wagner Group's attempted mutiny against Russian President Vladimir Putin's regime was aborted — but the energy markets are already on alert, throwing a spanner into inflation that has just started showing signs of cooling.
Following the aborted coup over the weekend, benchmark crude oil US West Texas Intermediate and Brent crude oil futures both jumped over 1% on Sunday. As of Monday, oil prices have come off — but analysts say oil futures could continue posting gains due to the geopolitical risk in energy giant Russia.
In a note on Sunday, research firm Rystad Energy wrote that it believes geopolitical risk from the internal instability in Russia has increased. "As such, we are likely to see a marginal uptick in oil prices in the coming days, if the situation does not deteriorate further," wrote Jorge Leon, a senior vice president at the firm.
Geopolitical events in big oil producers have increased oil prices by an average of 8% in the five days after the start of the triggering event, Leon added. Examples include the 1990 Iraqi invasion of Kuwait, and the outbreak of war between Russia and Ukraine in early 2022.
"Historically, such geopolitical uncertainty in big oil producers has immediately added significant upside pressure to oil prices, even though the flow of oil supplies has not immediately changed," Leon wrote in the note.
Even if there isn't an immediate hit to oil production in Russia, the unrest could spill over into former Soviet countries that also produce oil, such as Kazakhstan and Azerbaijan, added Leon. Such an event could send prices up.
As energy is a major input cost in the global economy, elevated oil prices could spell bad news for central banks' fight against inflation. Energy prices spiked to 14-year highs in the days following Russia's invasion of Ukraine. They have since come off to pre-war levels over fears of a global downturn.
"The escalation of a domestic military conflict in the days ahead could increase demand for inventory, at least temporarily, in an otherwise complacent oil market," Paul Sheldon, the chief geopolitical advisor at S&P Global Commodity Insights, told its trade news outlet.
Benchmark US WTI crude oil futures were up 0.2% at $69.29 a barrel at 1:29 a.m. EDT on Monday. Brent crude futures were 0.3% higher at $74.08 a barrel.
from Business Insider https://ift.tt/18O3SP0
No comments:
Post a Comment