Reports from the Rostov area on Saturday suggested that Chechen forces loyal to Vladimir Putin were advancing on the port city to retake it from Wagner forces, raising the spectre of mercenary forces fleeing south and potentially threatening Novorossiysk.
Macro Advisory’s Mr Weafer added that in a worst-case scenario, he expected to see oil prices increase by “three to five dollars a barrel”, up from its current price of $74. This would take it to highs last seen in April.
On Saturday the situation near Novorossiysk appeared stable, Ms Orlova said: “I don’t think, at the moment, there are signs that shipments are going to be constrained from the port of Novorossiysk, or other Russian Black Sea ports.”
Russia is one of the world’s largest oil exporters and appeared set to gain from a cut in oil production announced by the Arab-dominated Opec cartel earlier this month.
Its daily output of around 3.6 million barrels a day is mainly being purchased by China and India following sanctions from the US and EU that imposed a price cap on Russian oil products.
The economic impact of the Wagner rebellion on ordinary Russians appears to have been immediate. Local news outlets reported on Saturday that local bureaux de change were demanding up to 200 rubles to the dollar, a sharp increase from the previous day’s rates of around 85 rubles.
Although official currency markets largely suspended trading in the ruble after Russia’s invasion, semi-official exchange rates from sources connected to the government showed the ruble was flat against the dollar on Saturday.
Mr Weafer explained that Russia’s finance ministry now sets the exchange rate, meaning it does not respond to geopolitical events in the same way as other currencies.
The amount of hard currency in circulation within Russia has skyrocketed since September, when Mr Putin announced Russia’s first general mobilisation since the Second World War. This resulted in 2.2 trillion (£20.5bn) rubles being withdrawn from the country’s banks, Bloomberg reported.
Nigel Gould-Davies, the IISS’ senior fellow for Russia and Eurasia, added that the impact on business confidence would be “worse” than the hit Russia took after the February 2022 invasion of Ukraine.
“As far as Russia is concerned, this threatens the future of the regime. From the start of Putin’s presidency, the watchword of his rule has been stability and the unity of power, the power of vertical, as he calls it, a hyper-centralised state.
“Putin launched this violent and failed invasion. And that’s been an enormous setback. But that, in itself until now, had had only limited effects on Russia’s domestic stability.”
