In Geopolitics Today: Monday, June 5th
OPEC+ Deal Involves Saudi Arabia's Oil Production Cuts, Argentina's Bid for Financial Assistance from BRICS Gains Momentum, and other stories.
Russia Repurchasing Military Supplies from Allies
Recent analysis of customs clearance data indicates that Russia may be buying back military supplies previously exported to Myanmar and India. The reimportation of tank and missile components suggests Russia's intention to improve older weapons, possibly for deployment in Ukraine, with the assistance of countries that have long-standing military ties.
UralVagonZavod, a Russian tank manufacturer, imported military products from the Myanmar army, including sighting telescopes and cameras. The repurchased goods are likely intended for modernizing Russia's inventory of tanks, particularly older T-72 models, which are in need of upgrades. The procurement of optical equipment appears to be challenging for Russia, as it previously relied on technologies that are now difficult to attain due to trade sanctions. As Russia faces sanctions and limited access to technology, it seeks alternative sources to modernize its arsenal.
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OPEC+ Deal Involves Saudi Arabia's Oil Production Cuts
Saudi Arabia has announced a significant oil production cut of 1 million barrels per day (bpd) in an effort to support oil prices. The decision came after a meeting of the OPEC+ group of producers in Vienna. The kingdom's energy minister, Prince Abdulaziz bin Salman, implemented the cut as part of a broader deal that includes reducing quotas for weaker African members in the coming year. Meanwhile, Russia's production targets could also be lowered, pending a review. The United Arab Emirates (UAE), on the other hand, will have the opportunity to increase its production.
Oil prices have experienced a decline over the past 10 months, despite previous attempts by producers to tighten supplies. In response, Saudi Arabia and other OPEC+ members previously implemented a cut in April. However, prices subsequently reversed their gains and fell to nearly $70 a barrel. The decision to cut oil production aligns with the interests of many OPEC+ members, which need higher prices to balance their budgets and fund economic development. The outcome of the OPEC+ meeting and the Saudi production cut are expected to have a positive impact on oil prices, although the macroeconomic outlook remains a significant factor influencing market dynamics.
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Ukraine Launches Offensive in Eastern Donetsk
On June 4th, Ukrainian forces initiated a “large-scale” offensive on multiple fronts in south-eastern Donetsk province, marking the beginning of a long-anticipated counter-offensive against Russian-backed separatists in eastern Ukraine. The attack, described by Russia's defence ministry as an assault across five axes, has seen Ukrainian troops regain territory in the suburbs of Bakhmut and Novodonetske.
US and European military officials advising Ukraine believe that a swift and forceful assault is the best strategy to minimize casualties on the Ukrainian side and prevent Russian forces from reinforcing areas of breakthrough. They argue that Ukraine's cautious approach in the past, such as during last year's offensive in Kherson province, allowed Russian forces to escape with their equipment. The ongoing offensive in Donetsk aims to force Russia to defend multiple areas simultaneously, stretching its units thin along the front.
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Argentina's Bid for Financial Assistance from BRICS Gains Momentum
Argentina's quest for financial assistance has received a positive boost as the New Development Bank (NDB), led by BRICS nations, prepares to vote on Argentina's incorporation into the bank later this year. The NDB, established by Brazil, Russia, India, China, and South Africa, aims to provide support for public and private projects through various financial instruments. Argentina, facing a severe reserve scarcity crisis exacerbated by a historic drought impacting agricultural exports, seeks to strengthen its monetary reserves through the BRICS bank.
During a meeting at the NDB headquarters, President Dilma Rousseff informed Argentina's Economy Minister Sergio Massa that the inclusion of Argentina in the NDB is seen as the fastest way for the country to secure financing. Rousseff expressed Brazil's commitment to put forward and support Argentina's incorporation into the bank. Argentina's inclusion will be discussed by the governors of the financial institution from all the bloc members, with the vote scheduled for the first week of August in South Africa. To join the NDB, Argentina would need to make a capital contribution of US$250 million in sovereign bonds. In addition to Argentina, the board will also vote on the incorporation of Saudi Arabia, Egypt, and Zimbabwe, with the total funds reaching US$1 billion over a two-month period.
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US and India Agree on Roadmap to Strengthen Defence Partnership
US Defense Secretary Lloyd Austin's recent visit to India focused on enhancing the security partnership between the two countries and outlining a roadmap for cooperation over the next five years. The discussions were driven by shared concerns over China's economic rise and increased geopolitical assertiveness. Both sides emphasized the need for resilient supply chains, the co-development and co-production of new technologies, and strengthening operational collaboration across all military services,
The new roadmap for India-US defence-industrial cooperation aims to fast track technology collaboration and co-production in critical areas such as air combat, land mobility systems, intelligence, surveillance, and reconnaissance (ISR), munitions, and the undersea domain. This initiative seeks to provide India with access to cutting-edge technologies, supporting its defence modernization plans. The discussions also touched upon cooperation in space, cyberspace, and artificial intelligence, demonstrating the multifaceted nature of the evolving partnership. With ongoing border tensions with China and a desire for a balanced approach to its ties with Washington and Moscow, India has been expanding its defence partnerships with multiple countries, including the United States, France, Germany, and others.