Russian government bonds plummeted following a new series of attacks on oil refineries
The Russian government bond market fell again after a brief pause. On Monday, the RGBI federal bond price index declined for the third consecutive day—to 113.27 points, its lowest level in nearly a month.
Analysts at Vector Capital note that the decline in OFZs is accelerating. Yields on long-term Russian government bonds have approached 16% per year, and rates on bonds maturing after 2028 already exceed 15%.
One of the main reasons cited for the pressure on the market is a new wave of the fuel crisis in Russia. Since early August, at least four Russian refineries have halted oil processing due to drone attacks, and at least 10 regions have imposed restrictions on fuel sales at gas stations.
Against this backdrop, investors are increasingly doubting that the Central Bank of the Russian Federation will be able to continue lowering its key rate. Shortages of gasoline and diesel, along with the possibility of rising prices, are creating additional inflationary pressure, which could force the Russian regulator to act more cautiously.
The decline in government bonds is occurring alongside a drop in Russian stocks. On Monday, the Moscow Exchange Index lost another 2% or so following its sharpest intraday decline since September 2022.
According to analysts, market participants may be pricing in the risk of further escalation and more severe economic losses for Russia due to strikes on its oil infrastructure.
Source: The Moscow Times.
As a reminder, the Orsk oil refinery in Russia’s Orenburg region completely halted operations following an attack by Ukrainian drones.
As a reminder, the Russian oil refinery “Orsknefteorgsintez” halted oil processing following a Ukrainian drone attack on August 11.
Video: An oil refinery caught fire after the attack in Orsk.
Earlier, the General Staff confirmed a strike on the TANECO oil refinery in Tatarstan.
