In Geopolitics Today - Monday, April 4th
Pakistan and Saudi Arabia Agree to Draft Lasting Investment Strategy, US and its Allies Jointly Release Strategic Petroleum Reserves, Summit Between China and the European Union Exposes Differences
Pakistan and Saudi Arabia Agree to Draft Lasting Investment Strategy
Saudi Arabia and Pakistan are preparing a long-term investment strategy in the hopes of considerably boosting trade and investment ties between the two countries. The chairman of Pakistan’s Board of Investment (BOI), Azfar Ahsan, met with the Saudi Minister for Investment, Khalid Al-Falih, on the side-lines of the Tashkent International Investment Forum where the two are said to have discussed potential options for promoting bilateral investment. While the two countries have long been considered allies, their relationship has thawed in recent years as their national interests have diverged.
Pakistan has maintained a neutral stance over the war in Yemen and refused to respond to a Saudi request for troops in 2015 in an effort to balance Saudi Arabia and Iran. For its part, Saudi Arabia has in recent years cultivated closer ties with Pakistan’s main geopolitical rival India, which has also worked to widened the rift between Riyadh and Islamabad. India is now Saudi Arabia’s fourth largest trading partner and the main source of its oil imports. Now the political leadership in Riyadh and Islamabad are seeking to bolster bilateral ties despite the growing divergence in interests. Deepening trade and investment ties may work to bolster the bilateral relationship and prevent ties from diverging further, thereby preventing a strategic realignment emerging from Islamabad’s closer ties to Tehran and Riyadh’s growing ties to India.
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US and its Allies Jointly Release Strategic Petroleum Reserves
The United States is reportedly preparing a major release of 180 million barrels of crude oil over the next six months (or 1 million barrels of oil per day) from the country’s Strategic Petroleum Reserve. The move would be the second major release of strategic oil reserves in six months following a release of 50 million barrels of oil in November last year. This latest release is considerable, and underscores the extent to which sanctions on Russia have impacted energy markets. According to reports, a White House official stated that the move — which is to be coordinated with similar such moves by US allies — is intended to “shore up global supplies” and “lower gas prices.”
With oil prices still trading at above $100 per barrel, and with no sign that OPEC is prepared to significantly boost production levels, Washington is setting out to flood global energy markets with more oil in a bid to lower prices. OPEC appears determined to stick to established commitment to gradually add production capacity until its output returns to pre-pandemic levels. In resisting pressure from the US and its allies, OPEC has demonstrated that its interests supersede those of some of its customers in energy markets by refusing to openly joined the US-led sanctions regime against Russia. Saudi Arabia and the UAE — the only two OPEC members that have the capacity to significantly boost production on short notice — have maintained their ties with Russia, and continued to coordinate their energy policies with Moscow via the OPEC+ group. It is difficult to predict if this latest release of strategic oil reserves will drastically impact the price of oil, but since the EU, the UK, and the US have all stated that sanctions against Russia will remain in place even if a peace deal between Russia and Ukraine is signed, energy markets are set to remain short on crude oil supplies.
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Summit Between China and the European Union Exposes Differences
China and the European Union held a major summit which saw no major agreements. The event was the first major summit between the EU and China since 2020, yet unlike previous meetings, no joint statement was issued after meetings between high-level officials. While China tried to approach the summit amicably, emphasizing areas where cooperation could be expanded, EU leaders made clear that their priority at this time was the war in Ukraine.
During the summit, the presidents of the European Commission and European Council held separate talks with Chinese Premier Li Keqiang and President Xi Jinping. Brussels and Beijing held discussions centred around cooperation across a number of fields and agreed to hold further high-level talks on the environment, trade, energy and food security, and exchanged views on the war in Ukraine. But with with the EU’s leadership fixated on the ongoing war in Ukraine, China’s ambiguous position on that war and Beijing’s general reluctance to condemn Russia has worked to prevent progress on the agreed, but not yet ratified, EU-China Comprehensive Agreement on Investment. Another point of contention has arisen from a diplomatic and trade dispute between China and Lithuania, with the EU demanding China at the summit to stop its trade sanctions against Lithuania after Vilnius decided to open a Taiwan Representative Office.
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