In Geopolitics This Week
Iran and Saudi Arabia Agree to Restore Relations, OPEC+ Reaffirms Commitment to Close Cooperation in Oil Policy, Iran Discovers Large Lithium Deposit, and other stories.
Iran and Saudi Arabia Agree to Restore Relations
After holding a round of talks in Beijing, Iran and Saudi Arabia have agreed to re-establish diplomatic relations and reopen embassies within two months. The joint statement issued by the two countries emphasized the importance of respecting state sovereignty and not interfering in each other's internal affairs. The agreement is a significant step towards improving relations between the two regional rivals and could have far-reaching effects on politics in the Middle East.
The resumption of diplomatic ties and the potential for de-escalation of tensions could pave the way for progress in resolving the ongoing Yemen conflict. It could also shift the balance of power in the region. China's role as mediator has sparked speculation about its deeper involvement in the Middle East. While China has traditionally pursued a business and energy-focused approach to the region, its willingness to facilitate talks between Saudi Arabia and Iran could expand its influence in the region and reveal a more active diplomatic role, which could have implications for other powers such as the United States and Russia.
The deal suggests that Saudi Arabia is willing to prioritize its security interests over its alliance with the US, which has traditionally been its main security partner. It also highlights China's growing role in the Middle East amid the United States' waning regional involvement. China's involvement in the deal underscores its growing economic influence in the region and is part of a broader strategy to expand its Belt and Road Initiative, which includes expanding trade ties and investing in infrastructure projects across the Middle East.
OPEC+ Reaffirms Commitment to Close Cooperation in Oil Policy
Saudi Arabia and Russia, two of the world's largest oil-producing countries, have reaffirmed their commitment to closely cooperate on their respective oil policies. This decision came after a visit of Saudi Arabia's foreign minister, Faisal Bin Farhan Al Saud, to Moscow to meet with Russian Foreign Minister Sergey Lavrov. The two countries pledged to coordinate their efforts to maintain “balance and stability” on the global energy market.
The OPEC+ coalition has been instrumental in stabilizing the oil market by cutting production to keep prices from plummeting. The current OPEC+ agreements will remain in force until the end of the year, after which the group will consider the situation and make new decisions. Russia has announced its decision to reduce its oil production by 500,000 barrels per day (bpd) this month, which may impact its oil and fuel exports. However, OPEC+ delegates have said that the alliance does not plan to change its over oil production targets.
Russian Foreign Minister Sergey Lavrov stated that the two sides have also agreed to take additional steps to increase trade turnover between the two countries. Although the details of this plan have not yet been released, officials are expected to discuss the matter further at a meeting of the intergovernmental commission on trade, economic, scientific, and technical cooperation that will be held in Moscow later this year.
As major oil-producing countries, Russia and Saudi Arabia have significant influence on the global economy and politics. By working together within the OPEC+ framework and increasing trade cooperation, these two nations can have an even greater impact on the global energy landscape. Their pledge to maintain market stability through cooperation will have far-reaching effects on global politics and economics.
Iran Discovers Large Lithium Deposit
The Iranian government has announced the discovery of a massive lithium deposit in the mountainous Hamedan province, which has the potential to hold 8.5 million tons of lithium. Mohammad Hadi Ahmadi, an official at Iran's Ministry of Industry, Mines, and Trade, stated that this is the first time a lithium deposit has been found in the region. With this new discovery, Iran could now possess almost one-tenth of the world's lithium supply, making it the second-largest reserve in the world after a 9.2 million-ton deposit in Chile.
Lithium is a versatile element that has a wide range of applications in various fields such as ceramics, glass, rocket propellants, and underwater buoyancy devices. However, the primary driver of lithium mining today is the rise in demand for electric vehicles and other battery-powered technologies. More than 50% of lithium mined is now used in batteries.
The discovery of this massive deposit could have a significant impact on the global lithium market, as Iran could gain significant leverage in battery production supply chains. However, the quality of the deposit and Iran's ability to mine and export the metal remain to be seen. The remote and mountainous terrain presents a number of logistical challenges, and building the necessary infrastructure and supply chains from scratch would require substantial investments of time, resources, and expertise that Tehran is unlikely to facilitate in the near-term.
The geopolitical implications of this discovery cannot be overlooked either. With the demand for lithium set to grow in the decades ahead, a profitable means of extracting and transporting the discovered lithium could give Iran significant leverage in the global lithium market, potentially becoming a key player in battery production supply chains. The extent to which Iran will benefit from this discovery, however, remains to be seen.