In Geopolitics Today - Friday, January 21st
US Places Sanctions on China’s Defence Companies, OPEC Forecasts Robust Oil Demand in 2022, China, Iran & Russia Conduct Joint Naval Drills
US Places Sanctions on China’s Defence Companies
The United States has announced a fresh set of sanctions on three of China’s largest defence companies. Washington accused the companies for participating in “missile technology proliferation activities," without specifying what these activities involved. As a result of the imposed sanctions, all the three defence companies Poly Technologies Inc., China Aerospace Science and Technology Corp. First Academy, China Aerospace Science and Industry Corp. Fourth Academy, as well as all their subsidiaries, are barred from participating in US markets.
The move by the US to sanction China’s defence sector is significant, and will force Beijing to look outside US and US-aligned markets to source materials for its advanced weapons. The United States sanctions regime also applies secondary sanctions to these three companies and their subsidiaries as well, punishing any US ally with access to US markets in the event any chooses to do business with these defence firms. In response, China criticized Washington for imposing the sanctions, and accused US officials of hypocrisy for selling nuclear-capable cruise missiles. China’s Foreign Affairs Ministry spokesperson Zhao Lijian urged the United States to correct its “mistakes,” and to stop suppressing Chinese enterprises by revoking the sanctions.
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OPEC Forecasts Robust Oil Demand in 2022
Oil prices are approaching $90 per barrel at a time of intensified geopolitical uncertainty. Prices have continued their early-year surge in the new year, thanks in large part to tight oil and gas supplies amid growing supply disruptions. The energy market has reacted to the increased risk associated with supply uncertainties with a significant premium on both oil and gas.
But sporadic disruptions aside, OPEC does not expect a drastic change in the overall global demand of oil in the coming months. According to their latest report on global energy markets, they see global oil demand in the first quarter of 2022 unchanged from previous estimates at 4.2 million barrels per day. OPEC also estimantes that average global oil consumption is set to reach 100.8 million barrels per day, exceeding levels seen before the COVID-19 pandemic. OPEC also indicates that the current global economic momentum will continue. On the whole, OPEC said that the oil market is expected to “remain well-supported throughout 2022.”
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China, Iran & Russia Conduct Joint Naval Drills
Iran, Russia and China began a joint naval drill in the Indian Ocean today aimed at boosting naval coordination between the three nations at sea. The "2022 Marine Security Belt" exercise is taking place in the north of the Indian Ocean and is the third such drill between the three countries since first began conducting joint exercises in 2019. China attached great importance to security in the Gulf of Oman and nearby waters out of economic concerns.
The increasingly cooperative Beijing-Moscow-Tehran axis has a lot of potential, but at this point cooperation is sporadic. All three countries have banded together partly as a means to balance against the United States and its allies, but their cooperation to this day still has few concrete agreements to signal a transformation in ties yet. Nevertheless, if the three continue to integrate their militaries, and establish more concrete economic and political bonds, such a hypothetical alliance could harness considerable geopolitical power. The three countries have a combined population of 1.5 billion people who inhabit a geographic space 29 million square kilometres in size. In addition, China and Russia are both permanent members of the United Nations Security Council, with the respective right to veto.
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