Gas prices in Kazakhstan reportedly doubled last night, causing country-wide protests over higher fuel prices to take a violent turn.
Tens of thousands of Kazakhstan’s citizens are rioting, buildings are on fire, and military troops and police officers line the streets. What started as discontent over petroleum prices has morphed into a full-scale rebellion in opposition to Kazakhstan’s Nur Otan party and the country’s former president, Nursultan Nazarbayev. As civilians have taken to the streets, various leaders in the government have been forced to step down.
The world could soon feel the effects of Kazakhstan’s national riots. Kazakhstan is a member of OPEC, and the country is a huge exporter of natural gas, oil, and coal. Additionally, Kazakhstan is an important economic ally of China and Russia — the country is responsible for 5% of China’s imported natural gas. But Russia and China aren’t the only countries concerned about Kazakhstan’s unrest. Kazakhstan generates 1.6 million barrels of oil per day. And to make matters worse, supply problems in Libya are slowing the OPEC bloc’s production propensity, worsening an already-dire situation for oil production.
Consequently, U.S. oil futures moved significantly to reflect investors’ uncertainty over the political turmoil. West Texas Intermediate crude for February increased 2.1% on the news to surpass $80/barrel for the first time in months. On ICE Futures Europe, Brent crude gained 1.5% to hit $81.99/barrel. Oil and natural gas were hot topics for investors in 2021, and that trend appears to have carried into 2022.
Kazakhstan’s president has promised reforms and even let go of his cabinet to appease rioters. Russia’s Collective Security Treaty Organization announced that it would send additional troops, although that could potentially worsen social tensions.