Russia’s Mercenary Mutiny Could Be Bad News for Oil Markets
Bloomberg Opinion columnist Javier Blas joins In the City to discuss what an unstable Russia means for oil, and how policymakers in Sintra are preparing.
Source: Bloomberg
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The biggest threat to Vladimir Putin’s grip on Russia in his almost quarter-century of rule has huge implications for the oil market. But dissecting the precise impact of last weekend’s mercenary mutiny is difficult, according to Bloomberg Opinion columnist Javier Blas.
On this week’s In the City, Blas paints two pictures for hosts David Merritt and Francine Lacqua. The bullish case for oil involves Russia descending into a civil war similar to what happened in Libya, with the monopoly on power held by Putin curtailed and various factions controlling different oil production streams. That could break down production from the country, and interrupt the supply of about 10% of the global market of oil—what Russia represents today.
On the other end, the bearish possibility involves Putin being replaced by someone who doesn’t see the value of Russia belonging to OPEC. Russia could possibly choose to maximize oil production, triggering an oil price war. And as Blas explains, OPEC’s power would be weakened, bringing the world back to oil at $50-a-barrel.