The Russian rouble experienced a significant drop, nearing a 15-month low against the dollar, as markets reacted for the first time to the short-lived military coup against Vladimir Putin.
Trading at 2.1pc weaker against the dollar at 86.37, the rouble slumped to 86.88 when the markets opened. This represented its lowest value since late March of the previous year, which was roughly a month after Russia’s invasion of Ukraine.
This development coincides with a warning from Goldman Sachs about the potential long-term risk of rising oil prices. Brent crude, however, remained relatively steady overnight after the Wagner mercenary group halted its advancement on Moscow over the weekend.
Goldman Sachs analysts believe that while the immediate impact might be subdued, the unprecedented threat to Putin’s rule could result in a supply shock if his 23-year reign were to conclude.
Analysts Daan Struyven and Callum Bruce noted, “The heightened possibility of a reduced supply at some point may exert some upward pressure on prices.”
Goldman Sachs also addressed potential long-term risks. Given that the uprising originated in the southern city of Rostov-on-Don—located by the Sea of Azov, which leads into the Black Sea—the bank stated that the oil infrastructure in this region may be at a relatively increased risk of disruption or blockade.
RBC Capital Markets LLC, including analyst Helima Croft, commented, “The immediate threat to the Putin regime seems to have subsided.
“However, the prospect of additional civil unrest in Russia now needs to be considered in our oil analysis for the latter half of the year.”
European natural gas prices have seen a significant increase, influenced by unease following the brief uprising in Russia.
The key futures climbed up to 8.4pc, with gas prices already having risen about 30pc this month due to outages and concerns about supply unsettling markets.
The sudden rebellion that occurred over the weekend has become yet another element contributing to the market’s instability.
Despite Europe’s substantial efforts to decrease its reliance on Russian pipeline gas, it still imports a considerable volume of Russian LNG.
Tom Marzec-Manser, who heads gas analytics at ICIS in London, stated:
The geopolitical risk involving Russia has noticeably escalated since before the weekend.
The unpredictability of potential developments in Russia over the next few weeks – as opposed to within Ukraine – is expected to drive the markets upwards on Monday.
The Dutch front-month futures, which act as Europe’s pricing benchmark, were last reported to have increased by 7.4pc, coming in just under $35 per megawatt hour.
