China is Counting on Saudi Oil and Gas, it was only a few years ago that the signing of the China-Iran
Comprehensive Strategic Partnership (CSP) caused alarm bells to ring in many countries.
Topics
Reassessing the Fears
China’s Growing Thirst for Oil
The OPEC+ Slowdown
Rising to the Top
Reassessing the Fears
The fear was that this agreement would signal a new axis of evil being formed in the Middle East,
with China backing Iran and its struggle for regional supremacy against both Gulf Arab states and their American backer.
At first glance, it seemed like those fears were well-founded; after all, Beijing
had just signed an unprecedented bilateral economic, military,
and cybersecurity cooperation agreement with Tehran.
But upon closer inspection, it became clear that these fears were somewhat overblown,
Beijing has long pursued a policy of equivalency when engaging diplomatically
or militarily cooperating with other nations.
In 2016 they signed comprehensive strategic partnership agreements not only
with Iran but also with Saudi Arabia; then went on to participate in separate
military drills involving both Iran and Saudi Arabia during 2017 & 2019 respectively.
So, while there is no denying that China’s relationship with Iran does represent something
significant for global geopolitics as we know it today –
what’s important to remember is that ultimately those who argued Beijing had decided to back Tehran
exclusively have been proven wrong time and again by Chinese diplomatic actions since then.
It appears instead they are striving toward neutrality between all actors involved rather than taking sides
which could be seen as beneficial given how tense relations have become between certain GCC states
& their American allies recently due mainly to geopolitical differences.
China’s Growing Thirst for Oil
The International Energy Agency (IEA) released its latest oil market report on Wednesday,
and the news is good for China. The IEA forecasts that global oil demand will hit a record 101.7 barrels per day this year,
with nearly half of that coming from China alone! This means that not only is the world’s largest economy set to benefit greatly from increased demand for crude oil, but it also shows how much of an impact Chinese consumers have on global markets.
China’s growing appetite for petroleum products has been driving up prices
in recent months as well as contributing to tightening supplies worldwide.
This trend looks set to continue into 2021 given the forecasted growth
in Chinese demand and could lead to further price increases across all major energy commodities
such as gasoline, diesel fuel, and heating oils.
At present, however, there are still some uncertainties surrounding future supply levels
due largely to geopolitical tensions between Russia and Saudi Arabia which could potentially disrupt production
or exports at any time if relations deteriorate further between these two countries
who currently account for around one-third of global output combined.
It remains unclear whether or not current OPEC+ agreements can be maintained over time
so forecasting future supply levels accurately becomes increasingly difficult when taking into consideration factors like these…
Despite these difficulties though China will remain a key player in determining
where prices go next – both domestically within their own borders but also internationally too
given their ever-growing influence on international markets through increased investment abroad
along with other forms of economic activity such as trade deals etc…
With this being said we should expect continued high volatility
throughout 2021 especially if geopolitical tensions continue unabated
something investors would do well to keep an eye out for!
The OPEC+ Slowdown
According to the IEA, worldwide oil production is expected to grow
by only 1 million barrels per day between April and June 2021.
This marks a significant decrease from previous estimates of 2 million barrels per day for this period.
The slowdown in global oil production can be attributed largely to OPEC+ countries’
the decision last month not to increase their output as originally planned
due to its concerns about oversupply and weak demand amid an uncertain economic recovery outlook.
The cartel has instead decided on maintaining current levels of output until
at least mid-year when it will reassess market conditions before deciding whether it should adjust its policy further.
This news could have far-reaching implications for both producers
and consumers alike as reduced supplies could lead to prices higher
while also reducing available energy resources overall,
which may impact businesses around the world that rely heavily on
these products are for operations or transportation needs among other things…
For now, though, we must wait with bated breath until OPEC+ makes its next move later this year
one that will no doubt shape our energy landscape going forward into 2022!
Rising to the Top
As the world’s largest oil producer, Saudi Aramco pumps about 10% of the global crude oil supply.
This is an impressive feat considering that this company has only been around since 1933
and now produces more than 12 million barrels a day.
Saudi Aramco has become one of the most important players in the global energy market
due to its massive production capabilities and extensive network of pipelines throughout Saudi Arabia.
The company’s success can be attributed to its focus on technology, research
& development as well as strategic investments in new projects such as
refining capacity expansions and natural gas exploration projects.
The fact that Saudi Aramco pumps so much crude oil into our markets is
both beneficial for consumers but also carries some risks with it too,
namely geopolitical instability or price fluctuations caused by changes in demand
or supply levels from other countries like Russia or OPEC nations (Organization Of Petroleum Exporting Countries).
Additionally, there are environmental concerns associated with large-scale extraction activities
which could potentially damage delicate ecosystems if not managed properly.
Fortunately, though, these issues have largely been addressed
by stringent regulations imposed upon all companies operating
within Saudi Arabia including those owned by foreign entities like ExxonMobil
who recently announced plans to invest $53 billion into expanding
their operations there over 15 years starting 2021 onwards…
Overall then it’s clear that while pumping 10% of the world’s total
the daily output might come with certain drawbacks,
when done responsibly – it still provides us access to reliable sources of energy
at competitive prices which helps keep our economies running smoothly!