Biden to Hold Inaugural C5+US Summit

C5+US summit hosted by Biden, deal made with the US and Iran, and rising oil prices.

From the low-lying plains of Kazakhstan to the soaring mountains of Tajikistan, the rural landscapes of the Central Asian Republics are famed for being timeless. The geopolitical landscape of the region which spans across, Kyrgyzstan, Kazakhstan, Tajikistan, Turkmenistan, and Uzbekistan is however ever-changing.

For much of the 20th Century the region was under Moscow’s sphere of influence with all the aforementioned countries being part of the Soviet Union. While the collapse of the USSR saw these Soviet Socialist Republics gain independent statehood, the Kremlin has been keen to ensure that these states remain closely aligned. The conflict in Ukraine however has been a watershed event in multilateral relations between the so called ‘stans’ and Russia with the latter’s influence in the region coming under increasing pressure.

Russia’s waning influence in the region has left a geopolitical hole which China is keen to fill. This was most apparent when earlier this year the CCP hosted the China-Central Asia Summit in Xi’an. Here, Xi Jinping said that the countries “will jointly foster a new paradigm of deeply

complementary and high level win-win cooperation”. With Beijing hoping to gain greater influence in the region, Xi promised that the PRC is “is ready to help Central Asian countries improve their law enforcement, security, and defence capability construction”.

Hence, the Biden Administration’s latest move to host today’s summit is indicative of the scramble for influence in the region. The region represents an important geo-political space that the US would be keen to gain influence in, not least because of Chinese and Russian interests in the region. The five countries are also resource rich with Kazakh oil, Turkmen gas and Uzbek gold representing opportunities. Elsewhere, the summit is expected to cover trade, regional security, climate change, and reforms to improve governance. Nevertheless, as Forbes notes, the US is manifestly “a step or two behind adversaries” in its quest for influence on the new Silk Road. As such, all eyes are on today’s summit as well as China and Russia’s next moves.

US-Iranian Swap

Yesterday, the US and Iran pushed a prisoner swap over the line, after years of negotiations. The deal also saw the Biden Administration agree to unfreeze some $6bn in Iranian oil revenues which due to sanctions had been held in a South Korean bank. According to sources, the released funds are only allowed to be spent on humanitarian purposes, though the Iranian President Ebrahim Raisi maintained that it was up for his government to decide what constituted humanitarian assistance. Subsequent to the deal, President Biden stated that “We are focused daily on a policy for the Middle East that combines deterrence with diplomacy to reduce risk of Iran’s aggression”.

Oil Prices Continue to Surge

Wholesale oil prices rose to their highest level in half a year yesterday as WTI rose above $92dbp. This comes as investors weigh on the impact of extended supply-side cuts from Saudia Arabia and Russia which marked the latest attempt by OPEC+ to support prices.

Elsewhere, there have been some upbeat demand-side sentiments stemming from the worlds largest importer of crude oil, China. Though economic headwinds continue to make headlines, Beijing have announced a fresh package of fiscal measures which aim to stimulate the world’s second largest economy. This came as Saudi Aramco’s CEO Amin Nasser maintained that expectations that oil usage has peaked are unrealistic. Speaking at an event in Calgary, Nasser described “This notion is also wilting under scrutiny because it’s mostly being driven by policies rather than the proven combination of markets, competitive economics and technology”. At yesterday’s close, WTI was trading around 1.25% up on the day and 15% up on the month.