KUALA LUMPUR, June 26 — There has been a soft reaction from the global oil market despite a threat of an armed insurrection in Russia, the world’s second-largest exporter of crude, said S&P Global.

Russia had on Saturday (June 24) declared an anti-terrorist operation regime in Moscow and the Moscow region.

This came after the chief of the Wagner mercenary group led by Yevgeny Prigozhin vowed to overthrow Russia’s military leadership.

S&P Global vice-chairman Daniel Yergin said no disruption happened so far and the main issues governing the energy markets were a stronger economic rebound in China and concern about the impact of high-interest rates in the United States and other countries.

“The second half of the year is only four days away but so far we are not seeing the fundamentals tightening.

“Not much geopolitical impact is reflected in the market now as we have seen some months back,” he told a media briefing on the conclusion of the first day of the Energy Asia 2023 conference here today.

Meanwhile, on underinvestment for traditional renewable energy projects, Yergin said Asia is the most vulnerable to underinvestment for oil and gas (O&G).

“We saw that (underinvestment) impacted countries like Bangladesh and Pakistan, which were not able to afford liquefied natural gas,” he said.

Petroliam Nasional Bhd (Petronas) president and group chief executive officer Tan Sri Tengku Muhammad Taufik Tengku Aziz said there were multiple reasons for underinvestment in the O&G industry, including pressures from institutional investors and, in some cases, governments.

“We have seen some have stepped up their investments but there is still an issue that is overhanging the market and that was evident to the significance of underinvestment in the autumn of 2021 prior to the Russian invasion of Ukraine,” he said.

Tengku Muhammad Taufik said there was a period of underinvestment that precipitated due to the previous two price collapses.

“There was always the concern in 2017, 2018 and 2019 that money put into O&G would be stranded capital with a finite runway and the potential of having a decarbonised system arriving much faster,” he said. — Bernama