In Geopolitics Today: Wednesday, October 19th
The United States to Refill SPR When Oil Prices Fall below $72, Expansion of Ream Naval Base in Cambodia, and other stories.
Dutch Government to Boost Military Procurement
The Netherlands has decided to ramp up military procurement program by acquiring $3.44 billion worth of artillery, rocket artillery systems and mobile anti-air systems between 2023 and 2026. The Dutch Junior Defence Minister Christophe van der Maat wrote in a letter to parliament justifying increased military spending by stating that “the war on the European continent underlines the need to be able to act in all parts of the spectrum of violence."
The Netherlands decided in January,to boost its defence expenditures by “billions of euros,” moving the country close to the NATO-wide goal of spending at least 2% of GDP on defence by 2024. After years of declining spending, the Dutch military now recognizes the importance of rocket artillery systems by initiating the acquisition process following numerous accounts of battlefield success in Ukraine. In addition, 10 howitzer cannons and mobile anti-air missile systems will also be purchased to bolster Dutch defences.
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Russia Introduces Martial Law in Newly Annexed Territories
Russian President Vladimir Putin has signed a decree imposing martial law in the four annexed regions of Ukraine — Donetsk, Luhansk, Zaporizhia and Kherson. The decree also gives additional emergency powers to authorities in Russia’s border regions.
The decree came as officials in Kherson told civilians to leave some areas as soon as possible in anticipation of an imminent Ukrainian attack, with up to 60,000 civilians from Kherson reportedly expected to relocate. The introduction of martial laws suggests that Russia is preparing the Russian public for the likely loss of Kherson as Russian forces look unlikely to stabilize the front line should it lose Kherson. A Russian retreat from the western bank of the Dnieper River is looking increasingly likely if Ukrainian forces are able to break through Russian lines.
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The United States to Refill SPR When Oil Prices Fall below $72
The United States has announced a set of new actions aimed at strengthening US energy security, encouraging production increases, and bringing down fuel prices. This will involve buying crude oil in order to replenish the strategic petroleum reserve when prices fall to between $67 and $72 per barrel.
The US Department of Energy (DOE) has noted that a sale of 15 million barrels of crude oil is set to be drawn from the Strategic Petroleum Reserve (SPR) in December 2022, marking the last sale of the 180-million-barrel drawdown that the US President announced in March. The President is also calling on the DOE to be ready to move forward with additional significant SPR releases this winter, though none are yet planned. The President’s decision to initiate efforts to refill the SPR by purchasing crude oil at or below $67-$72 per barrel will add to global demand at those prices.
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Expansion of Ream Naval Base in Cambodia
New satellite images show a major expansion of the Chinese-built Ream Naval Base in Cambodia has taken place over the past three months. Twenty-eight acres of land appears to have been cleared for new construction, with the port facilities quickly taking shape. The expansion will cause some concern to US and its allies, though no clear evidence of a permanent Chinese military presence are evident as yet.
Reports suggest that a 2019 secret agreement between Cambodia and China stipulated that Chinese naval assets and military personnel will be permanently stationed at the Cambodian base. China has been funding the port’s expansion and dredging, causing speculation that it could one day permanently host troops or large naval assets. A potential Chinese naval presence in Cambodia would help Beijing secure its interests in the Strait of Malacca and Gulf of Thailand, expand power projection in South China Sea, and help secure energy imports from the Persian Gulf.