Oil prices jump over Kazakhstan unrest

LONDON: Unrest in OPEC+ member Kazakhstan has pushed up oil prices as investors fear supply interruptions, but the uranium market appears less affected despite the Central Asian country being the world’s second largest producer.

“Riots obviously can stop production and exports,” said Bjarne Schieldrop, an analyst at Swedish bank SEB.

Over the week, crude prices gained about five percent and on Friday Brent exceeded $83 per barrel, “putting it at its highest level since the price slide triggered by the first appearance of the Omicron variant in late November,” said Carsten Fritsch, commodities analyst at Commerzbank.

Protests spread across the country of 19 million this week in outrage over a New Year increase in prices for liquid petroleum gas (LPG), which many use to fuel cars.

Thousands took to the streets in Almaty and in the western province of Mangystau in protests that broadened to include anti-government slogans.

Violence erupted when police fired tear gas and stun grenades at thousands protesting in Almaty on Tuesday.

The next day protesters stormed government buildings, setting them ablaze, and a nationwide state of emergency was declared.

Kazakh president Kassym-Jomart Tokayev on Friday rejected calls for talks with protesters after days of unprecedented unrest, authorising his forces to shoot to kill without warning.

– Production ‘continuing’ –

The country is the largest oil producer in central Asia with a twelfth of the world’s proven reserves, according to the US Energy Information Administration (EIA). Kazakhstan produced around 1.8 million barrels a day in 2020.

The country is also the second largest oil producer in the OPEC+ group of top oil producers, behind Russia.

Hydrocarbons made up 21 percent of its GDP in 2020, according to the World Bank.

Production by Tengizchevroil, the largest oil venture in Kazakhstan, “has been temporarily adjusted as a result of protests at the Tengiz field”, said Stephen Brennock of PVM brokerage.

But several analysts said there was no indication that oil production had been seriously affected.

On Friday, production at the country’s top three fields was “said to be continuing”, said Brennock.

“Unrest in Kazakhstan is bullish in the short-term,” said Neil Wilson, an analyst at Markets.com.

At close of trading on Friday, crude oil prices had fallen slightly, with Brent falling 0.28 percent to $81.76 and West Texas Intermediate down 0.54 percent at $79.03.