"China\u2019s influence in oil markets grows with BRICS expansion"

" China\u2019s influence in oil markets grows with BRICS expansion \r\n\r\nPiece by piece, China continues to build alternatives to each of the key building blocks of the West\u2019s world order, including - crucially - a new global oil market order, as\u00a0 analysed in full in my new book \u00a0of the very same name. The latest building block is the invitation to three of the world\u2019s biggest oil and gas powers \u2013 Saudi Arabia, Iran, and the UAE \u2013 to join the BRICS political and economic grouping, comprised of Brazil Russia, India, China, and South Africa. This can be considered as a developing world alternative to the U.S.-dominated Group of Eight (G8) major industrialised nations from which Russia was suspended indefinitely in March 2014 following its annexation of Ukraine\u2019s Crimea. As it stands, Iran and the UAE said that they will accept the invitation, while Saudi Arabia stated that it is considering the proposal. With the addition of all three new members, the BRICS group would control around 41 percent of all global oil production, according to International Energy Agency estimates. In practical terms, though, it is irrelevant whether Saudi Arabia formally joins or not, as all three countries \u2013 and virtually all of the Middle East\u2019s major oil and gas players \u2013 have already pledged their allegiance to China in one of its geopolitical building blocks or another.\u00a0While BRICS can be considered China\u2019s alternative to G8 (now G7 again following Russia\u2019s permanent withdrawal in January 2017), the Shanghai Cooperation Organisation (SCO) is a much bigger deal altogether.\r\n\r\nAs\u00a0 exclusively reported \u00a0by\u00a0 OilPrice.com \u00a0at the time, and\u00a0 analysed in full in my new book , Saudi Arabia had already signed a memorandum of understanding on 16 September 2022 granting it the status of SCO \u2018dialogue partner\u2019. At that point, the Kingdom did nothing to encourage the release of the news at that point, unlike later in April this year - just after it had agreed to a stunning resumption of a relationship deal with Iran, brokered by China. By then, Saudi Arabia had decided that the time was right to ensure full coverage for the news that its cabinet had approved a plan to join the SCO as a dialogue partner. As also\u00a0 exclusively reported \u00a0by OilPrice.com at the time, Iran approved its own \u2018full membership\u2019 to the SCO back in September 2021 and was granted it on 4 July this year. Iran\u2019s membership of the SCO simply rubber-stamped China\u2019s control over the country \u2013 and over neighbouring Iraq, heavily influenced by Iran \u2013 through the all-encompassing \u2018Iran-China 25-Year Comprehensive Cooperation Agreement\u2019, as first revealed anywhere in the world in my\u00a0 3 September 2019 article \u00a0on the subject and fully examined in\u00a0 my new book .\r\n\r\nUnlike the rather vague operational parameters of the BRICS organisation, the SCO is very specific, very powerful, and very serious in its objectives. Already it is the world\u2019s biggest regional political, economic and defence organisation both in terms of geographic scope and population. It covers 60 percent of the Eurasian continent (by far the biggest single landmass on Earth), 40 percent of the world\u2019s population, and more than 20 percent of global GDP. It was formed in 2001 on the foundation of the \u2018Shanghai Five\u2019 that was set up in 1996 by China, Russia, and three states of the former USSR (Kazakhstan, Kyrgyzstan and Tajikistan).\r\n\r\nAside from its vast scale and scope, the SCO believes in the idea and practice of the \u2018multi-polar world\u2019, which China anticipates will be dominated by it by 2030. Veteran Russian Foreign Minister, Sergey Lavrov, has since stated that: \u201cThe Shanghai Cooperation Organisation is working to establish a rational and just world order and [\u2026] it provides us with a unique opportunity to take part in the process of forming a fundamentally new model of geopolitical integration\u201d. Aside from these geopolitical redesigns, the SCO works to provide intra-organisation financing and banking networks, plus increased military cooperation, intelligence sharing and counterterrorism activities, among other things.\r\n\r\nThe end of December 2021\/beginning of January 2022 saw meetings in Beijing between senior officials from the Chinese government and foreign ministers from Saudi Arabia, Kuwait, Oman, and Bahrain, plus the secretary-general of the Gulf Cooperation Council (GCC). The principal topics of conversation, as analysed fully in\u00a0 my new book , were to finally seal a China-GCC Free Trade Agreement and to forge \u201ca deeper strategic cooperation in a region where U.S. dominance is showing signs of retreat\u201d. Also during the meetings, Chinese President Xi Jinping and Saudi Crown Prince Mohammed bin Salman signed a China-Saudi partnership pact with King Salman.\r\n\r\nThe new pact pledged cooperation in finance and investment, innovation, science and technology, aerospace, oil, gas, renewable energy, and language and culture. Having got all the names gathered to sign these all-consuming cooperation agreements, Xi then identified two \u2018priority areas\u2019 that he believes should be addressed as quickly as possible. The first is the transition to using the Chinese renminbi currency in oil and gas deals done between the Arab League countries and China, and the second is to bring nuclear technology to targeted Middle Eastern countries, beginning with Saudi Arabia.\r\n\r\nOn the first of Xi\u2019s urgent priorities \u2013 moving away from the core U.S. dollar pricing of the energy markets and substituting the renminbi instead \u2013 China has long regarded the position of its renminbi currency in the global league table of currencies as a reflection of its own geopolitical and economic importance on the world stage. An early indication of China\u2019s ambition for the renminbi was evident at the G20 summit in London in April 2010, when Zhou Xiaochuan, then-governor of the People\u2019s Bank of China (PBOC), flagged the notion that the Chinese wanted a new global reserve currency to replace the U.S. dollar at some point. China has also long been acutely aware of the fact that, as the largest annual gross crude oil importer in the world\u00a0 since 2017 , it is subject to the vagaries of U.S. foreign policy tangentially through the oil pricing mechanism of the U.S. dollar.\r\n\r\nThis view of the U.S. dollar as a weapon was reiterated by the former executive vice-president of the Bank of China, Zhang Yanling, in a speech in April, saying that the latest sanctions against Russia would \u201ccause the U.S. to lose its credibility and undermine the [U.S.] dollar\u2019s hegemony in the long run.\u201d She further suggested that China should help the world \u201cget rid of the dollar hegemony sooner rather than later.\u201d Saudi Arabia has long been receptive to the idea of replacing the U.S. with the Chinese renminbi for its energy dealings with China, as also analysed in\u00a0 my new book . In August 2017, the then-Saudi Vice Minister of Economy and Planning, Mohammed al-Tuwaijri, told a Saudi-China conference in Jeddah that: \u201cWe will be very willing to consider funding in renminbi and other Chinese products.\u201d He added: \u201cChina is by far one of the top markets\u2019 to diversify [the funding basis of Saudi Arabia] \u2026 [and that] We will also access other technical markets in terms of unique funding opportunities, private placements, panda bonds and others.\u201d\r\n\r\nTurning to the second of Xi\u2019s urgent priorities \u2013 bringing nuclear technology to the Arab League and GCC countries, starting with Saudi Arabia \u2013 there was a peculiar timing attached to the statement. Just before Christmas 2021, news emerged that U.S. intelligence agencies had found Saudi Arabia was manufacturing its own\u00a0 ballistic missiles with the help of China . Given China\u2019s long-running and extensive \u2018assistance\u2019 to Iran\u2019s nuclear ambitions, fully analysed in\u00a0 my new book , this information was received very poorly in Washington, with the focus being on what Beijing\u2019s endgame might be in building out the nuclear capabilities of rival key states in the Middle East.\r\n\r\nCurrently, the only Arab nation to have nuclear reactors is the UAE \u2013 also newly signed up to the BRICS grouping. Even with the U.S.\u2019s extensive presence of military huge military bases in and around the UAE, Washington was \u201cextremely concerned\u201d, as a senior figure in the U.S. energy security complex exclusively told\u00a0 OilPrice.com \u00a0last year, to find that China had been building a\u00a0 secret military facility \u00a0in and around the UAE port of Khalifa. Based on classified satellite imagery and human intelligence data, U.S. officials stated that China has been working to establish \u201ca military foothold in the UAE.\u201d The UAE authorities stated that they were not aware of such activity being conducted by China at one of their biggest ports with months of extremely high levels of movement of enormous Chinese ships in and out of it day and night. Previously, Saudi Arabia had been in talks to acquire nuclear technology from the U.S. under the \u20181-2-3\u2019 protocol - intended to limit the enrichment of uranium for arms purposes. Whether China will insist on such a protocol, or if it is in place will insist that it is adhered to, remains to be seen."

"China\u2019s influence in oil markets grows with BRICS expansion"

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