Russia Mutiny Throws New Risk Into Already Volatile Gas Market

(Bloomberg) -- Gas traders are bracing for more volatility after a short-lived rebellion in Russia poses yet another risk to supply.

Northeast Asian spot liquefied natural gas prices rose to $12 per million British thermal units on Monday, while swap values were pegged above that level, according to traders and brokers. That’s about 50 cents to $1 higher than on Friday, they said. In Europe, benchmark futures jumped as much as 14%.

Even as the uprising by Yevgeny Prigozhin, leader of the Wagner mercenary group, has been defused, the crisis still represents the biggest threat so far to President Vladimir Putin’s control over Russia. 

Traders are watching for any signs of further instability in Russia that could affect the country’s gas production and exports. The turmoil comes as European gas is already seeing the highest volatility since Russia invaded Ukraine early last year.

Ongoing outages in Norway and plans to close a gas field in the Netherlands have led to turbulent price swings this month. While Russian gas deliveries to Europe are dwindling, some nations, including Austria and Slovakia, still rely on the fuel flowing via Ukraine. 

“Russian geopolitical risk now is significantly higher than before the weekend,” said Tom Marzec-Manser, head of gas analytics at ICIS in London. “The uncertainty of what could happen in the coming weeks within Russia itself – rather than within Ukraine – is likely to push markets higher on Monday.”

To be sure, oil and gold markets were relatively calm on Monday in the wake of the weekend’s geopolitical shock.

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