Oil spikes as Putin orders 'partial mobilization' in Ukraine

Adam Berry

In his first national address since the invasion of Ukraine in February, Vladimir Putin announced a "partial mobilization" of the population, to bolster flagging manpower for Russia's "special military operation" in the Donbas region. Only reservists will be conscripted, with the Defense Ministry later clarifying that as many as 300,000 troops could be called up. The declaration comes after big battlefield losses for Moscow over the past few weeks, following a counteroffensive by Ukraine that retook more than 10% of the territory held by Russia.

Quote: "When the territorial integrity of our country is threatened, we will certainly use all the means at our disposal to protect Russia and our people," Putin continued. "This is not a bluff. Those who are trying to blackmail us with nuclear weapons should know that the wind patterns can also turn in their direction. To those who allow themselves such statements, I would like to remind them, Russia also has many types of weapons of destruction, the components of which in some cases are more modern than those of the countries of NATO."

WTI crude prices advanced on the news, climbing 3.2% to $86.62/bbl, over fears that any escalation in the war could lead to tighter oil and gas supply. While new sanctions could be unveiled, the EU has already banned seaborne imports of Russian crude from Dec. 5, and given the recent aggressiveness of the Federal Reserve, many appear to be more worried about lower oil demand growth amid a global economic slowdown. "It seems like a knee-jerk reaction to a sliver of news and would be liable to further recalibration in the coming hours," related Vandana Hari, founder of Vanda Insights in Singapore.

Go deeper: The Kremlin is moving ahead with the formal annexation of the so-called Donetsk and Luhansk People's Republics, as well as the Kherson and Zaporizhzhia regions. The West has called out the referendums, set to be held between Sept. 23-27, as sham votes, and compared them to the illegal one held in Crimea back in 2014. The annexation would be "irreversible" and enable Moscow to use "all possible force in self-defense, according to Dmitry Medvedev, Deputy Chairman of Russia's Security Council (who also served as the country's president from 2008 to 2012).

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