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Russia’s economy under threat as Wagner rebellion targets export hubs in Moscow

Russian President Vladimir Putin

*Russia’s Wagner mercenary group appeared to have staged ‘a local coup’ against Moscow Saturday, June 24, as economists warn the grain and oil prices forecast will increase after mercenary forces move into Rostov-on-Don key export hub in the country

Isola Moses | ConsumerConnect

Russia’s economy could be choked off after Wagner Chief Yevgeny Prigozhin’s apparent ‘coup attempt’ centred on an export hub for grains and oil, economists have said.

Global grain prices could skyrocket by more than a quarter, with experts also predicting steep increases in the price of oil when markets reopen next Monday, The Telegraph UK report stated.

It was learnt the armed rebellion against Russian President Vladimir Putin had so far focused on Rostov-on-Don, a key coastal city on the northern banks of the Sea of Azov, which economists warned could threaten ongoing global supplies of commodities such as wheat and corn.

Reports also indicates Russia’s Wagner mercenary group appeared to have staged a local coup against Moscow on Saturday, with its chief, Mr Prigozhin, saying his forces are “true patriots” as they entered the port city.

Tatiana Orlova, lead emerging markets economist at Oxford Economics and Russia specialist, also confirmed that Rostov-on-Don holds “a strategic position” because it is one of the country’s key export hubs.

Russia is one of the world’s leading grain exporters and any disruption to supplies will quickly ripple across the rest of the world, report noted.

Global prices for the likes of wheat and corn increased dramatically when Russia invaded Ukraine February 2022.

Chris Weafer, Chief Executive of Economic consultancy Macro-Advisory, predicted that grain prices could skyrocket by as much as 29 percent, following the Rostov insurrection in the country.

We are true patriots, says Prigozhin

Meanwhile, Wagner Chief Yevgeny Prigozhin has called his forces ‘true patriots’ in an apparent coup attempt against Moscow Saturday.

Explaining that current prices are around 730 cents per bushel (approximately 27kg), Mr Weafer said that if the Rostov situation destabilises, “I would expect to see 1,000 cents fairly quickly… which would be double what it was in May.”

Around 200 miles south of Rostov-on-Don lies the city of Novorossiysk, which is an important port for both Russian and central Asian countries’ oil exports.

Ms Orlova highlighted the Caspian Pipeline Consortium, whose flagship pipeline supplies oil to the port from Siberia and Kazakhstan.

If the uprising situation spills southwards, she warned, global oil markets could see knock-on effects.

“I think the oil markets are going to be worried about that kind of scenario on Monday when they open. I would not be surprised to see oil and grain futures going up,” she said.

On Saturday the situation near the southern port appeared stable, she 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.”

Although official currency markets largely suspended trading in the ruble after Russia’s invasion, unofficial exchange rates showed the ruble was flat Saturday, report said.

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.

Besides, the amount of hard currency in circulation within Russia has skyrocketed since September, when President Putin announced Russia’s first general mobilisation since the World War II.

This resulted in 2.2tn (£20.5bn) rubles being withdrawn from the country’s banks, Bloomberg report noted.

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