Russia’s oil prices soar while stock market tumbles in wake of uprising

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Oil prices experienced an increase due to supply concerns, while stock markets declined after Yevgeny Prigozhin’s troops withdrew from Russia. This marked the end of the warlord’s armed uprising, but also raised doubts regarding the stability of Vladimir Putin’s regime.

In early trading in Asia on Monday, Brent crude, the international benchmark, rose by up to 1.3% to $74.80 per barrel, while US marker West Texas Intermediate increased by up to 1.4% to $70.11 per barrel. However, both benchmarks later saw a 0.2% gain.

The surge in crude oil prices followed Prigozhin and his Wagner paramilitary forces reaching an agreement with Moscow to withdraw from southern Russia after Putin made comments comparing the crisis to the revolution of 1917.

Traders noted that the short-lived mutiny raised serious concerns about the future of Putin’s regime, but its immediate impact on crude output from one of the world’s major suppliers remained uncertain.

“Whenever a major oil supplier experiences a serious geopolitical event, there is always a possibility of supply disruption,” said Stephen Innes, managing partner at SPI Asset Management. “It opens up a can of worms and we’ll need to observe how that plays out.”

Following the revolt, gold and the yen both saw slight gains as a risk-off sentiment spread across markets. Gold rose by 0.2% to $1,924 per troy ounce, while the yen strengthened by 0.2% to ¥143.4 against the dollar.

The yen was also supported by comments from a board member of the Bank of Japan, suggesting that the central bank should consider adjustments to its yield curve control policy.

Bond markets benefited from the flight to safe havens, with the yield on 10-year US Treasuries falling by 0.02 percentage points to 3.719%. As bond prices rise, yields fall.

As China’s markets reopened after a long holiday, the renminbi fell by up to 0.5% to a seven-month low of 7.2153 against the dollar. Concerns over the country’s economic growth contributed to this decline.

Equity markets in Asia also experienced losses on Monday, with Japan’s benchmark Topix index down by 0.1%, Hong Kong’s Hang Seng falling by 0.3%, and China’s CSI 300 shedding 1.2%.

Australia’s S&P/ASX 200 index dropped by 0.5% after Goldman Sachs analysts downgraded the country’s equities to underweight due to dimming prospects for Chinese economic growth.

Futures markets indicated minor gains at the opening of Wall Street, with the benchmark S&P 500 expected to rise by 0.2%. The FTSE 100 was projected to increase by 0.1% in London.