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WORLD | Jun 26, 2023

Oil markets shrug off Russian political turmoil

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A pump is seen at a gas station in Manhattan, New York City, U.S., August 11, 2022. (Photo: REUTERS/Andrew Kelly/File)

LONDON (Reuters)

Global oil prices were steady on Monday (June 26), with political instability from an aborted revolt by Russian mercenaries over the weekend viewed by the market as not posing an immediate threat to oil supply from one of the world’s largest producers.

Brent crude futures slipped three cents to US$73.82 a barrel by 1332 GMT. West Texas Intermediate crude (WTI) was 14 cents lower, or 0.2 per cent, at $69.02. Both benchmarks gained as much as 1.3 per cent in early Asian trade.

A clash between Moscow and Russian mercenary group Wagner was averted on Saturday after the heavily armed mercenaries withdrew from the southern Russian city of Rostov under a deal that halted their rapid advance on the capital.

However, the challenge has raised questions about President Vladimir Putin’s grip on power and some concern about possible disruption of Russian oil supply.

“There’s not much geopolitical impact on the market now. It is dominated by economics, not geopolitics,” Daniel Yergin, vice chairman of S&P Global, said on the sidelines of an industry event on Monday.

Both Brent and WTI prices fell by about 3.6 per cent last week on worries that further interest rate hikes by the US Federal Reserve could sap oil demand at a time when China’s economic recovery has also disappointed investors.

“China’s economic growth has been a nightmare for commodity markets, particularly in oil and industrial metals,” CMC Markets analyst Tina Teng said in a note.

Goldman Sachs analysts said markets could price in a moderately higher probability of domestic volatility in Russia leading to supply disruptions, adding that the impact could be limited because spot fundamentals have not changed.

In an early indicator of future US supply, the number of oil and natural gas rigs operated by American energy companies fell for an eighth week in a row for the first time since July 2020, a closely followed report showed on Friday.


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