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- SITREP for Friday, April 7, 2023
SITREP for Friday, April 7, 2023
Welcome to the SITREP for Friday, April 7, 2023.
It’s Passover, Easter, and Ramadan this week so a good number of you will be celebrating this weekend. (And if none of those is your thing, today is also National Beer Day. )
Chag Pesach Sameach, Happy Easter, رمَضَان كريم , and cheers (delete as necessary)
But before you slack off for the weekend, let’s catch you up on some important goings on.
If this is your first time receiving this email, greetings! These SITREPS (situation reports) contain updates on critical events and essential metrics for you to use in your decision-making. There’s a guide here and a detailed white paper about the small data approach to risk assessment here.
Let’s go.
All (Diplomatic) Roads Lead to Beijing Part I
It’s been a busy week for Beijing’s diplomats. First, they hosted the Saudi and Iranian foreign ministers, the first face-to-face meeting for the regional rivals since their agreement to re-establish diplomatic ties last month. From CNN:
China’s top diplomat Wang Yi called the agreement a “victory for dialogue and a victory for peace,” and framed it as part of China’s “constructive role in facilitating the proper settlement of hot-spot issues around the world,” according to a statement from China’s Foreign Ministry in March when the deal was announced.
On Thursday, Chinese foreign ministry spokesperson Mao Ning said Beijing will continue to work to improve relations between Saudi Arabia and Iran.
“China is ready to continue to play an active role in mediation, support the two sides in increasing their relations, realize good-neighborly friendship and contribute Chinese wisdom and strength to the security, stability and development of the Middle East region,” Mao said during a regular press conference.
Any move to ease tensions in the region is welcome but the view that this is the end of US influence in the region is premature. Saudi, like many other regional states, maintains a significant US military presence and benefits from access to US military hardware. So while this current round of peacemaking is Beijing-centric, this is a signal of a new multi-polar Middle East, not the end of US involvement.
Nevertheless, anyone operating in the region should now consider how China’s growing influence may affect their business and relationships.
All (Diplomatic) Roads Lead to Beijing Part II
Meanwhile, EU President von der Leyen and French President Macron were also in Beijing to meet with President Xi on a range of issues, not least the war in Ukraine.
Chinese President Xi Jinping and French President Emmanuel Macron review troops during an official ceremony at the Great Hall of the People, in Beijing, China, April 6, 2023. REUTERS/Gonzalo Fuentes
From Reuters:
France said the discussions between the leaders were “frank and constructive,” while China described them as “friendly” and “in-depth”…
“It was interesting to hear that President Xi reiterated his willingness to speak” to Zelenskiy, Von der Leyen said, calling his words “positive”. Xi said a conversation could happen when the “conditions and time are right”, she added.
Beijing’s previous peace proposal was dismissed out of hand by Kyiv and Washington, so it is interesting to hear President Xi’s offer to speak to President Zelensky. Whether or not Beijing can effectively mediate in this conflict remains unclear but XI’s growing importance as a global actor is in no doubt. (See Reuters for more.)
Assad Back in From The Cold
The trip to Beijing isn’t Saudi Foreign Minister Prince Faisal bin Farhan’s only travel this month as he is also expected to be in Damascus soon to invite Syrian President Bashar al Assad to the upcoming Arab League Summit. Al Assad’s attendance at the May 19 meeting would fully cement his return to the regional community of leaders after several months of increasingly high-profile regional visits. (See Middle East Eye for more.)
Despite Syria’s brutal civil war, triggered by al-Assad’s brutal crackdown in the wake of the Arab Spring over a decade ago, he and his family seem to have emerged with their power intact and enormous wealth. (See the FT for more.) Their stranglehold on the country, including its industrial and construction industries plus its NGO community, means that any trade or relief effort in Syria will be almost impossible to conduct without dealing with the al Assads, directly or indirectly.
While US and Western sanctions remain in place, this could place many regional companies and organizations in a difficult position: their government may be keen to normalize relations with Damascus but any trade with Syria could breach sanction rules, complicating relations with Europe and the US. Organizations operating regionally should keep track of these developments to avoid inadvertently contravening US and Western sanctions.
OPEX+ Production Cuts
The OPEC+ oil cartel announced production cuts of 1.5 million barrels per day (bpd) last Sunday, causing oil prices to spike over the last few days. However, this might not have as much of a long-term effect as it first appears, as the cut seems to have been in response to the recognition that there’s an oversupply in oil markets, rather than an attempt to push prices higher. The oversupply seems to be due to three elements: sanctions against Moscow haven’t dampened Russia’s output as much as had been expected; the demand caused by China’s economic reopening is less than expected, and Beijing had already stockpiled crude in advance of the damned increase: and overall demand is down as inflation and worries about a recession curb manufacturing and consumption.
Brent Futures Over the Last Month. From Bloomberg
However, crystal-ball gazing with respect to crude prices is beyond my abilities so I won’t offer any commentary on what might happen next, but there are some interesting perspectives here, here and here.
On to the numbers.
Key Metrics
90-Day Relative Values
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21-Day Trends
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Oil (Brent Crude)
Brent Crude is high for this 90-day interval. Prices increased sharply over the last 21 days after significant fluctuation.
Iron and Steel
Iron and Steel is low for this 90-day interval. Prices ended relatively flat over the last 21 days after slight fluctuation.
Market Volatility
Market Volatility (VIX) is very low for this 90-day interval. The index decreased sharply over the last 21 days after moderate fluctuation.
Wheat
Wheat is very low for this 90-day interval. Prices ended relatively flat over the last 21 days after moderate fluctuation.
Shipping (FBX)
Shipping (FBX) is very low for this 90-day interval. Prices decreased moderately over the last 21 days after significant fluctuation.
Election Watch
Finnish President Sanna Marin’s Social Democratic Party lost last weekend’s elections, ceding control to the more pro-business, harder-right National Coalition Party (NCP). This will make little difference internationally, and the election was coincidental with the final stages of Finland’s acceptance into NATO, but will likely change the domestic landscape. (See Reuters for more.)
30 April: Paraguay, President, Senate and Chamber of Deputies
7 May: Thailand, Parliament
Palate Cleansers
Excellent summary of Dave Allen’s GTD system from ExcelHumor
That’s it for this week. See you again on Tuesday for some more on crisis readiness.
All my best
Andrew
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Disclaimer
These SITREPS are provided for informational and educational purposes only. Comments or observations are my own and do not reflect the opinions of any firms I am associated with. The sources from which the metrics are derived are obtained from sources believed to be accurate and reliable, however due to the possibility of human and mechanical error or other factors, Andrew Sheves / Tarjuman LLC is not responsible for any errors or omissions.