Yevgeny Prigozhin’s forces turn their attention to the port city of Rostov-on-Don – Arkady Budnitsky/Anadolu
Economists have said Russia’s economy could shut down after an apparent coup attempt by Wagner chief Yevgeny Prigozhin centered on the export hub of grain and oil.
Global grain prices could rise by more than a quarter, with experts also predicting a steep rise in oil prices when markets reopen on Monday.
Economists have warned that the armed rebellion against Vladimir Putin, so far centered on Rostov-on-Don, a major coastal city on the northern shore of the Sea of Azov, could threaten ongoing global supplies of commodities such as wheat and corn.
Russia’s Wagner mercenary group appears to have launched a local coup against Moscow on Saturday, with its chief Mr Prigozhin entering the port city, saying his forces are “true patriots”.
Tatiana Orlova, chief emerging markets economist and Russia expert at Oxford Economics, said Rostov-on-Don holds “a strategic position” as it is one of the country’s major export hubs.
Russia is one of the world’s leading grain exporters and any disruption in supply will have an immediate global impact.
When Russia invaded Ukraine in February last year, global prices for commodities like wheat and corn rose dramatically.
Chris Weifer, chief executive of the economic consulting company Macro-Advisory, predicted that grain prices could rise as much as 29 percent after the Rostov uprising.
Wagner chief Yevgeny Prigozhin calls his army ‘true patriots’ after attempted coup – AFP
Explaining that current prices are around 730 cents per bushel (about 27 kg), Mr. Weifer said that if Rostov’s position becomes untenable, “I would expect to see 1,000 cents shortly … which is comparable to May.” I would double that.”
About 200 miles south of Rostov-on-Don is the city of Novorossiysk, an important port for oil exports to Russian and Central Asian countries.
Ms. Orlova highlighted the Caspian Pipeline Consortium, whose flagship pipeline supplies oil from Siberia and Kazakhstan to the port.
He warned that global oil markets could be adversely affected if the insurgency spread to the south.
“I think oil markets will be concerned about that kind of scenario when they open on Monday. I would not be surprised to see an increase in oil and grain futures,” he said.
The situation near the southern port appeared stable on Saturday, he said: “I don’t think, at the moment, there are indications that shipments from Novorossiysk port, or other Russian Black Sea ports, are going to be disrupted.”
Although official currency markets largely suspended trading in the ruble following Russia’s invasion, unofficial exchange rates showed the ruble was flat on Saturday.
Mr. Weifer pointed out that Russia’s Ministry of Finance now sets the exchange rate, which means it doesn’t react to geopolitical events like other currencies.
Since September, when Mr. Putin announced Russia’s first general mobilization since World War II, the amount of hard currency in circulation within Russia has skyrocketed. As a result, 2.2 trillion (£20.5 billion) rubles were pulled out of the country’s banks, Bloomberg reports.
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