Goldman Sachs says Wagner Group could disrupt global oil supplies.

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 emphasized 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.

Goldman Sachs’ analysis on longer-term impact + the Libya context

According to Bloomberg, Goldman Sachs has emphasized that there is a relatively larger danger of disruption or blockade to the oil infrastructure in that area because of the uprising that started close to Rostov-on-Don in the south, a region connected to the Sea of Azov and the Black Sea.

Additionally, because of Wagner’s presence in Libya, the group has the ability to disrupt oil production. In the past, it has sparked blockades that have repeatedly limited Libya’s 1.1 million barrels per day of output.

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.

Furthermore, the core output of OPEC may rise if tensions between the two biggest producers inside the organization rise.

Additionally, according to Bloomberg, RBC Capital Markets LLC analysts stress the need of taking into account the possibility of additional civil disturbance in Russia when examining oil dynamics for the second half of the year.

Backstory

Tensions between Russia’s defence 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.

Prigozhin stated:

“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

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