China’s Influence In Oil Markets Grows With BRICS Expansion

Piece by piece, China continues to build alternatives to each of the key building blocks of the West’s world order, including – crucially – a new global oil market order, as analysed in full in my new book of the very same name. The latest building block is the invitation to three of the world’s biggest oil and gas powers – Saudi Arabia, Iran, and the UAE – to join the BRICS political and economic grouping, comprised of Brazil Russia, India, China, and South Africa. This can be considered as a developing world alternative to the U.S.-dominated Group of Eight (G8) major industrialised nations from which Russia was suspended indefinitely in March 2014 following its annexation of Ukraine’s Crimea. As it stands, Iran and the UAE said that they will accept the invitation, while Saudi Arabia stated that it is considering the proposal. With the addition of all three new members, the BRICS group would control around 41 percent of all global oil production, according to International Energy Agency estimates. In practical terms, though, it is irrelevant whether Saudi Arabia formally joins or not, as all three countries – and virtually all of the Middle East’s major oil and gas players – have already pledged their allegiance to China in one of its geopolitical building blocks or another. While BRICS can be considered China’s alternative to G8 (now G7 again following Russia’s permanent withdrawal in January 2017), the Shanghai Cooperation Organisation (SCO) is a much bigger deal altogether. As exclusively reported by OilPrice.com at the time, and analysed in full in my new book, Saudi Arabia had already signed a memorandum of understanding on 16 September 2022 granting it the status of SCO ‘dialogue partner’. At that point, the Kingdom did nothing to encourage the release of the news at that point, unlike later in April this year – just after it had agreed to a stunning resumption of a relationship deal with Iran, brokered by China. By then, Saudi Arabia had decided that the time was right to ensure full coverage for the news that its cabinet had approved a plan to join the SCO as a dialogue partner. As also exclusively reported by OilPrice.com at the time, Iran approved its own ‘full membership’ to the SCO back in September 2021 and was granted it on 4 July this year. Iran’s membership of the SCO simply rubber-stamped China’s control over the country – and over neighbouring Iraq, heavily influenced by Iran – through the all-encompassing ‘Iran-China 25-Year Comprehensive Cooperation Agreement’, as first revealed anywhere in the world in my 3 September 2019 article on the subject and fully examined in my new book. 

Related: Iraq-Turkey See More Delays In Resuming Oil Flows

Unlike the rather vague operational parameters of the BRICS organisation, the SCO is very specific, very powerful, and very serious in its objectives. Already it is the world’s biggest regional political, economic and defence organisation both in terms of geographic scope and population. It covers 60 percent of the Eurasian continent (by far the biggest single landmass on Earth), 40 percent of the world’s population, and more than 20 percent of global GDP. It was formed in 2001 on the foundation of the ‘Shanghai Five’ that was set up in 1996 by China, Russia, and three states of the former USSR (Kazakhstan, Kyrgyzstan and Tajikistan). Aside from its vast scale and scope, the SCO believes in the idea and practice of the ‘multi-polar world’, which China anticipates will be dominated by it by 2030. Veteran Russian Foreign Minister, Sergey Lavrov, has since stated that: “The Shanghai Cooperation Organisation is working to establish a rational and just world order and […] it provides us with a unique opportunity to take part in the process of forming a fundamentally new model of geopolitical integration”. Aside from these geopolitical redesigns, the SCO works to provide intra-organisation financing and banking networks, plus increased military cooperation, intelligence sharing and counterterrorism activities, among other things. 

The end of December 2021/beginning of January 2022 saw meetings in Beijing between senior officials from the Chinese government and foreign ministers from Saudi Arabia, Kuwait, Oman, and Bahrain, plus the secretary-general of the Gulf Cooperation Council (GCC). The principal topics of conversation, as analysed fully in my new book, were to finally seal a China-GCC Free Trade Agreement and to forge “a deeper strategic cooperation in a region where U.S. dominance is showing signs of retreat”. Also during the meetings, Chinese President Xi Jinping and Saudi Crown Prince Mohammed bin Salman signed a China-Saudi partnership pact with King Salman. The new pact pledged cooperation in finance and investment, innovation,…