Russian unrest will be bullish for oil in the short term, but longer term, could mean more oil on the market and less cooperation with OPEC+.
Wagner Group Chief Yevgeny Prigozhin has thrown a hand grenade into Russian politics with his attempted rebellion against the military establishment, which might morph into an attempted coup. And, as with any political unrest in a major oil exporter, there will be significant fallout for global oil prices, depending on how it develops.
The first and most immediately salient point is that oil prices should spike in reaction to uncertainty about the impact on Russian oil exports, probably $5-10 this week (barring a quick collapse of the rebellion). Although Russian pipeline exports to the west would be theoretically at risk, most have already ended because of war-related sanctions. It seems unlikely that the Wagner Group will attack pipelines to Turkey or Eastern Europe which are still operating, plus its units are far enough Black Sea ports that seaborne exports are likely to be unaffected.
But while fighting rages—or even sputters—the fear that production and exports might be affected will certainly prove bullish for oil prices. Fortunately, the market is roughly in balance at the moment, so the threatened loss of moderate amounts of supply should not cause panic (or prudent) buying, but if the conflict spreads, the oil price will face increasing pressures. Still, it seems highly unlikely that political unrest more generally will spread, as a combination of patriotism, censorship and repression seems to have kept domestic opposition quiescent.
