() — Oil prices were stable on Monday, while natural gas and wheat prices rose as investors reacted to the brief and chaotic weekend uprising in Russia.
Markets largely focused on whether the turmoil in Moscow could disrupt the global supply of raw materials. Russia is the world’s second largest exporter of oil and the largest exporter of wheat.
US crude oil futures briefly rose 1.3%, before giving up those gains and trading unchanged. Brent crude, the international benchmark, was also little changed after gaining 0.6% earlier. Both contracts lost almost 4% last week.
“As this weekend’s short event in Russia appears to be over, we do not expect to see such a significant rise in oil prices,” Rystad Energy analysts wrote in a note.
“However, we believe that the geopolitical risk amid internal instability in Russia has increased. As such, we are likely to see a marginal rebound in oil prices in the coming days if the situation does not deteriorate further.”
The prices of reference European natural gas prices rose 10% from Friday’s close to €36 ($39) per megawatt hour. Prices have skyrocketed in recent weeks, mainly due to outages at some Norwegian gas plants. News that a Dutch gas field will be shut down permanently in October has also boosted prices.
Russia’s gas exports to Europe have fallen sharply since its full-scale invasion of Ukraine in February 2022, but it still supplied 15% of European Union demand last year.
Chicago wheat futures gained 2.5%. Russia’s wheat exports are forecast to hit a record 45 million tonnes this year, putting it well ahead of the next biggest exporter, the European Union, according to the US Department of Agriculture.
Russia glimpsed the threat of an armed insurrection over the weekend, with Wagner Group mercenaries marching on Moscow as President Vladimir Putin vowed retaliation, before a snap deal appeared to defuse the crisis as quickly as it had arisen.
Although the immediate risk of bloodshed appears to have dissipated, much uncertainty remains. US Secretary of State Antony Blinken said Sunday that the uprising shows “cracks” in Putin’s role as the country’s leader.
“Potential risks to watch out for may lie in any renewed opposition from the Russian public to Putin’s leadership,” said Yeap Jun Rong, a market analyst at IG Group.
Fighters of the private mercenary group Wagner leave the headquarters of the Southern Military District to return to the base, in the city of Rostov-on-Don, Russia, on June 24, 2023. (Credit: Stringer/Reuters)
Signs that global energy demand could weaken as economies slow have sent US crude prices down nearly 14% year-to-date to just under $70 a barrel. . The international benchmark, Brent crude, is down by a similar margin.
But anything that could jeopardize Russia’s ability to continue supplying world energy markets will be watched anxiously by Western politicians and the country’s biggest clients in Asia.
Stocks go down, the ruble falls
Reacting to Wagner’s brief insurrection, the Russian ruble opened at its lowest level in almost 15 months. Its latest price fell 1.3% to 84.8 per US dollar.
Asian stock markets were choppy on Monday.
Japan’s Nikkei 225 opened lower and closed 0.3% lower. Hong Kong’s Hang Seng Index also lost 0.5% in a swinging session. China’s Shanghai Composite fell 1.5% and Australia’s S&P/ASX 200 lost 0.3%.
European stocks opened slightly weaker and US stock futures were also pointing a bit lower.
“Weekend events in Russia add to potential uncertainty over the next few days, but appear to have limited impact on the market at the open,” Jeffries analysts said in a morning note.
Last Friday, world markets They fell broadly as investors grew increasingly concerned that further interest rate hikes by central banks would send major economies into a prolonged recession.
Federal Reserve Chairman Jerome Powell said last Wednesday that more interest rate hikes would likely be needed this year to bring US inflation down to the central bank’s 2% target.
This was followed by a stronger-than-expected rise in UK borrowing costs from the Bank of England on Thursday, which opted for a half percentage point hike after this week’s data revealed surprisingly stubborn inflation. .
And then on Friday, data showed that Japanese inflation, excluding fresh food and energy costs, hit a 42-year high of 4.3%, fueling speculation that the Bank of Japan may reconsider its loose monetary policy. and begin to harden it.
— Anna Cooban contributed to this article.
