- On 23 and 24 June the Wagner mercenary group rebelled and advanced towards Moscow before withdrawing after a deal.
- Commodity markets followed the episode nervously: instability in a major producer quickly shows up in prices.
- It was a brief episode, but it recalled that geopolitical risk remained very much alive and that preparation is the best response.
On 23 and 24 June 2023 the Wagner mercenary group rebelled and advanced towards Moscow before withdrawing after a deal. The episode lasted barely a couple of days, but it was a demonstration of fragility inside the country at the centre of the war.
For markets and companies, what mattered was not going into the detail of what happened in Russia, but understanding what it means for a major producer of energy and grain to show signs of internal instability. Although the episode closed quickly, it raised the question of how prepared others were for a similar scenario. Although the outcome was swift, the episode recalled that events in a single country can set off chain reactions in energy, grain and metals markets, and in the decisions of distant companies.
What happened
The Wagner rebellion was a reminder that the risks of a war are not confined to the front: they can also arise inside the borders of the countries involved, and with them uncertainty for trade, energy and supply chains in the region.
The brevity of the event should not lead anyone to play it down. An event of this kind, even if it closes quickly, forces governments, companies and investors to reconsider what might have happened had the situation evolved differently and what level of uncertainty needs to be built into plans. When an event of this kind occurs, the information available is scarce and changes rapidly, so it is wise to be wary of the first interpretations and wait for a fuller picture before drawing conclusions.
Why markets moved
Commodity markets followed the episode nervously. Instability in a major producer of energy and grain has effects all over the world, because any threat to its production or exports quickly shows up in prices.
The mechanism is the same as seen on other occasions: commodity prices incorporate the probability that supply will be interrupted, and that probability changes with every piece of news. That is why swings in response to uncertain events can be rapid, and why they tend to unwind just as quickly if the situation clears up. Russia is a significant player in the markets for oil, gas, fertilisers, grain and some metals, so any sign of instability is read as a possible risk of disruption to those supplies.
A reminder
It was a brief episode, but a reminder that geopolitical risk remained very much alive. Companies that buy energy or commodities can review which suppliers they depend on, what room for manoeuvre they have if there is a disruption and what part of their costs is covered.
And families with investments can check that their portfolio does not depend excessively on a single country, sector or asset. It is not about predicting unforeseeable events, but about structuring wealth and plans so that they withstand surprises. A calm review with the adviser, away from a moment of tension, is the best way to do it. A useful review exercise is to identify which of the company’s inputs depend on regions with high political risk, how much stock there is of them and how long it would take to replace them with other sources if necessary. The point is not to anticipate every shock, which is impossible, but to have a plan for acting in an orderly way when one occurs: who decides, with what information and which options are already prepared.
Geopolitical risks rarely give warning: preparation is the best response.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
