Upheaval in Kazakhstan could rattle energy markets

NUR-SULTAN • Kazakhstan, where violent protests against the government have been raging, has some of the largest oil fields on earth and accounts for more than 40 per cent of the world's uranium production.

So far, the unrest does not seem to have cut into production of either oil or uranium, but it has the potential to ripple through critical energy markets.

Global oil prices have risen and the price of uranium has jumped sharply, fuelled by supply worries amid escalating unrest in Kazakhstan.

The global computing power of the Bitcoin network has dropped sharply as the shutdown this week of Kazakhstan's Internet during the deadly uprising hit the country's fast-growing cryptocurrency mining industry.

Kazakhstan last year became the world's second-largest centre for Bitcoin mining after the US, according to the Cambridge Centre for Alternative Finance, after major hub China clamped down on crypto-mining activity.

Bitcoin dropped 2.3 per cent to around US$42,095 after hitting its lowest since late September last year as the hawkish US Federal Reserve minutes also sapped appetite for riskier appetites.

Uranium prices, which have risen in recent months on hopes of a revival of the nuclear industry to combat climate change, rose 8 per cent on Wednesday amid reports of clashes in the Central Asian country.

Some 22 per cent of the uranium purchased by nuclear plants in the United States in 2020 came from Kazakhstan, according to US government statistics.

"Without Kazakhstan right now, the world would not be anywhere near well-supplied for uranium," said Mr Jonathan Hinze, president of UxC, which tracks the market, though he noted that utilities buy the fuel with long lead times.

Any drop in oil output from Kazakhstan, which produces about 2 per cent of world supplies, would also likely be felt in an already tight market. Some oil producers are not meeting the quotas allocated to them under agreements by Opec+, the Organisation of the Petroleum Exporting Countries and its allies.

Kazakhstan, a member of the group, has been substantially exceeding its quota and is one of the few producers that looked likely to be able to increase output in the coming months.

"This is the sort of supply risk that has not been on anybody's radar screen," said Mr Bill Farren-Price, director for intelligence at energy research firm Enverus.

He added that oil analysts had mostly focused on problems elsewhere, including tensions between Saudi Arabia and Iran.


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A version of this article appeared in the print edition of The Straits Times on January 08, 2022, with the headline Upheaval in Kazakhstan could rattle energy markets. Subscribe