Russia's Mutiny and China's Slowdown: Implications for Energy Markets

The recent mutiny in Russia had little impact on energy markets, with prices barely moving. This is due to the market being well-supplied and a weak global economy dampening demand. However, there are still risks that could rattle markets before summer's end, such as internal dissent and Putin's vulnerability. While the attempted mutiny did not cause energy price spikes, complacency can be dangerous. Supply disruptions within Russia could trigger higher prices, but the impact might be short-lived due to a slowing global economy. Despite the uncertainties, there is enough supply to keep prices muted until real disruptions occur. The risk premium on oil is not being priced in by traders, but further disruption could still materialize. Putin's response to the mutiny has shown his vulnerability and lack of resolve, which could have chaotic consequences if his grip on power continues to slip. The extent of the Wagner Group's reach and influence raises underappreciated market risks, and the possibility of a bloody mess still looms. Other risks to Russian supply include domestic terrorism, martial law, and loose nukes. With Saudi Arabia's production cut approaching, the market becomes more vulnerable, and the risk premium is expected to rise. Summer surprises may await in energy markets.