Jim Cramer On Oil Going Higher Amid Wagner Mutiny In Russia: 'Just Be Another Headfake'

Oil prices rose during Tuesday morning’s Asian trading session driven by geopolitical concerns surrounding Russia and potential supply disruptions.

Prominent market commentator, Jim Cramer, indicated oil prices may not shoot much higher. ‘Don’t bite on oil going higher. It will just be another headfake as Russia has transactional friendships with China and India,' he said in his tweet.

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Cramer's advice comes at a time when oil prices shot higher in the wake of an attempted mutiny by Wagner forces against Russian president Vladimir Putin. Although the situation quickly de-escalated, oil traders are holding themselves back from factoring in the relief.

Price Action: West Texas Intermediate futures maturing in August was trading 0.43% higher at $69.67 per barrel during Tuesday morning Asian trade. Brent futures maturing in August rose 0.34% to trade at $74.43 per barrel. The United States Brent Oil Fund LP BNO closed 0.56% higher on Monday while the Vanguard Energy Index Fund ETF VDE gained 1.65%, according to Benzinga Pro.

It is notable that concerns surrounding extended rate hikes by central banks and the fears of a subsequent recession appear to be holding back any unreasonable gains in oil prices. The fears seem to be justified given the recent central banking developments. If the Federal Reserve indicated it will hike rates by another 50 basis points this year, the Bank of England went ahead and implemented such a hike in its recent policy following a higher-than-expected inflation print for May in the U.K. But the focus recently has been on Russia.

Expert Take: ANZ Research said in a note that despite the rebellion being short-lived, there is likely to be increased focus on geopolitical issues in the coming months.

‘The oil market had become complacent as Russian oil continued to seep into the international market. This can't be assumed to the same extent following the weekend's events. This is likely to lead to a risk premium being applied to the oil price amid the risk of further civil unrest. However, for the moment, the impact is likely to be minimal,' it said according to a research note.

ANZ Research further noted that the market is slowly turning its focus to the upcoming driving season in the U.S. and said preliminary data suggests demand is rising strongly. ‘The American Automobile Association estimates 43m motorists will drive 50 miles or more from their homes this Independence Day weekend. That's 4% more than 2019,' it said.

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