Lagos, June 26, 2023 – Leading global investment bank, Goldman Sachs, has expressed concerns about the potential impact of the rise of the mercenary group, Wagner, on the global oil market.
This development poses a unique challenge to Russian President, Vladimir Putin, as Russia is a significant player in the global oil production landscape.
Bloomberg reports that in a recent note, Goldman Sachs warned of fresh risks to the global oil market due to the uprising by Wagner.
However, the immediate effects are expected to be limited.
The bank emphasised that there is an increased possibility of reduced oil supply which could eventually exert upward pressure on prices.
It is worth noting that, despite the situation, Russia’s crude shipments have not been visibly affected.
Nevertheless, as one of the top oil exporters and a key member of OPEC+ alongside Saudi Arabia, any disruptions in Russia’s oil production could have significant implications for global oil markets.
According to Bloomberg, Goldman Sachs has highlighted that the rebellion initiated near Rostov-on-Don in the south, a region connected to the Sea of Azov and the Black Sea, poses a relatively higher risk of disruption or blockade to oil infrastructure in that area.
Furthermore, due to Wagner’s presence in Libya, the group can disrupt oil production and has previously caused blockades which have resulted in the limitation of almost all of Libya’s 1.1 million barrels per day of output on multiple occasions within the past five years.
Analysts speculate that the oil market may not fully reflect the increased risk of supply disruptions from Russia, as its OPEC+ partners, including Saudi Arabia, could compensate for a significant export decline by reducing their voluntary production cuts.
Additionally, if tensions escalate between the two largest producers within the OPEC cartel, there may be an increase in core OPEC output.
In addition, Bloomberg reports that RBC Capital Markets LLC analysts emphasize the necessity of factoring in the risk of further civil unrest in Russia when analyzing oil dynamics for the latter half of the year.
Tensions between Russia’s defense ministry and the mercenary group Wagner intensified on Friday, June 23, following claims by the group’s leader, Yevgeny Prigozhin, that Russian forces had attacked Wagner field camps in eastern Ukraine.
In a recorded statement, Prigozhin appeared to call for a rebellion against the Russian military leadership.
At one point, Wagner’s forces were marching towards Moscow and had reached a proximity of 200km from the Russian capital.
However, Prigozhin decided to order his mercenaries to halt their advance to prevent the shedding of Russian blood, instead agreeing to live in exile in Belarus. (OPEC)
Prigozhin had saidstated:
“They intended to disband the Wagner military company. We began a march for justice on June 23. Now, we have reached a critical moment where bloodshed is possible.
“In recognition of our responsibility and the potential loss of Russian lives, we have decided to turn our columns around and return to our planned field camps.”
It is important to note that Wagner operates as a group of entities functioning as a private military company
