Economics

The Trump administration has warned France and Germany to release emergency diesel reserves to help lower global fuel prices or risk facing a potential US ban on diesel exports, according to people familiar with the discussions.

The warning represents a sharp escalation in Washington’s pressure on European allies as President Donald Trump looks for ways to increase fuel supplies and bring down prices ahead of the November midterm elections.

US officials have become increasingly frustrated with France and Germany, which Washington believes have not fully acted on earlier commitments to release emergency oil and petroleum reserves as global fuel markets face mounting disruptions.

“It is in Europe’s best interest to work with the United States as we pursue multiple pathways to boost the supply of refined products and lower costs for consumers,” a US official told Reuters.

A second source familiar with the discussions said the United States had asked the European Union to release 120 million barrels of diesel over the next six months.

The demand highlights the growing importance of Europe’s fuel reserves at a time when disruptions to major energy-producing regions are tightening global supplies.

Washington Raises Pressure on Europe

The US administration’s warning comes as Trump considers restricting US diesel exports as part of a broader effort to increase domestic supplies and reduce fuel prices for American consumers.

The approach creates a difficult balance for Washington. Limiting exports could increase the amount of diesel available inside the United States, potentially putting downward pressure on domestic prices. But it could simultaneously reduce supplies available to international markets, particularly Europe, which has become increasingly dependent on imported refined fuels.

US Energy Secretary Chris Wright said on Wednesday that the administration expected European countries to announce additional diesel supplies soon.

“We’ve lost some diesel exports from the Middle East, although we’re restoring those, and we’ve lost diesel exports from China,” Wright told reporters.

The disruptions have exposed the vulnerability of global refined fuel markets to geopolitical conflicts and changes in trade flows.

Germany’s economy ministry did not immediately respond to a request for comment, while France’s energy ministry declined to comment.

The White House’s pressure also appears to have become a broader diplomatic issue among Western allies.

An official at the French presidency said Trump and French President Emmanuel Macron did not discuss the issue when they met on the sidelines of the UN General Assembly in New York last week.

Macron, however, plans to convene a video conference of G7 leaders to address rising fuel prices and the availability of refined petroleum products.

The discussions are expected to include coordination over the release of emergency reserves in cooperation with the International Energy Agency.

Why Europe Matters to the Fuel Market

Europe’s position in the global fuel market has changed substantially since Russia’s invasion of Ukraine.

European countries previously relied heavily on Russian crude oil and refined petroleum products. The subsequent sanctions and restrictions on Russian energy imports forced European governments and companies to find alternative suppliers.

The result has been greater dependence on imports from countries including the United States and suppliers in the Middle East and Asia.

That dependence has become more significant as the conflict involving the United States, Israel and Iran has disrupted energy flows from the Middle East.

The loss or reduction of refined fuel exports from major suppliers can quickly affect diesel markets because refining capacity cannot always be shifted between regions immediately.

Diesel is particularly important because it powers much of Europe’s commercial transport, heavy industry, agriculture and logistics sectors. Sustained shortages can therefore affect the broader economy rather than simply increasing prices at fuel stations.

The US Faces Its Own Fuel Dilemma

For Trump, the issue also has a strong domestic political dimension.

Fuel prices are highly visible to American consumers, making gasoline and diesel costs politically sensitive ahead of the November midterm elections.

The administration is therefore examining multiple ways to increase available supplies and reduce costs.

But a potential US diesel export ban could have consequences beyond America’s borders.

The United States has become an important supplier of refined petroleum products to international markets. Restricting those exports could tighten supplies elsewhere, potentially pushing international prices higher even if American prices fall.

That creates a difficult policy tradeoff for Washington.

The administration wants to protect US consumers from high fuel costs while maintaining sufficient supply in global markets. European governments, meanwhile, face pressure to use their own emergency reserves even as they seek to maintain energy security following the loss of Russian supplies.

Europe Seeks a Coordinated Response

France appears to be pursuing a broader G7 response rather than treating the issue as a bilateral dispute with Washington.

Macron’s planned meeting would allow the world’s major industrial economies to discuss the availability of refined products and potentially coordinate emergency stock releases through the International Energy Agency.

Such coordination could help prevent individual countries from taking measures that unintentionally worsen shortages elsewhere.

But disagreements over how much fuel should be released, when reserves should be used and who should bear the cost could complicate the process.

Emergency reserves are designed primarily to protect countries against severe supply disruptions. Releasing large quantities can provide temporary relief, but it also reduces the buffer available if another disruption occurs.

That makes Europe’s response particularly consequential at a time when energy markets remain exposed to geopolitical shocks.

A New Test for Transatlantic Energy Relations

The dispute illustrates how the global energy system has become increasingly intertwined with broader geopolitical and trade relationships.

Europe needs reliable fuel supplies after cutting its dependence on Russian energy, while the United States is attempting to use its position as a major energy producer and exporter to address domestic price pressures.

Trump’s warning to France and Germany adds another layer to that relationship by linking European reserve policy to continued access to US diesel exports.

Whether Europe ultimately releases the amount of diesel Washington has requested will depend on national assessments of market conditions, domestic energy security and the risks of further supply disruptions.

For now, the dispute signals that the energy consequences of conflicts in the Middle East are reaching far beyond the region itself.

As the United States and its European allies try to contain fuel prices, they face a common problem but increasingly different pressures over how the burden of stabilising global energy markets should be shared.

With information from Reuters.

China said on Monday that a two-month extension of its trade truce with the United States would give both sides more time to assess the implementation of their existing arrangements and discuss further steps to resolve economic and trade disputes.

China’s Commerce Ministry confirmed that the truce would remain in place through January 10, saying the extension would provide a “relatively stable and predictable policy environment” for businesses and allow the two countries to continue their talks.

The extension was among the main outcomes of a summit between Chinese President Xi Jinping and US President Donald Trump in Washington last week, their second meeting this year.

Background

The United States and China have spent years imposing tariffs and other trade restrictions on each other, with tensions extending beyond tariffs to technology, investment, supply chains and market access.

The latest extension follows an agreement by the two sides to establish a trade council that will oversee discussions on a range of economic issues.

One of its first tasks will be to discuss reciprocal tariff reductions covering about $30 billion worth of goods, with the aim of maintaining more stable economic and trade relations between the two countries.

China’s Commerce Ministry said the arrangement would also create better conditions for Chinese exporters seeking access to the US market.

The two sides will hold regular discussions on investment opportunities and barriers, policy transparency and predictability, and concerns raised by businesses.

Why it matters

The extension gives US and Chinese companies more time to operate under a relatively predictable trade environment while negotiators work through remaining disputes.

Agriculture is one of the main areas covered by the latest arrangements. A White House list showed that China plans to reduce tariffs on a range of US agricultural products, including corn, wheat, dairy products and meat, although soybeans were not included.

The proposed cuts appear linked to a US-stated Chinese commitment to purchase $17 billion worth of agricultural products. China has already resumed large-scale purchases of US soybeans under an agreement reached last year that called for annual purchases of 25 million metric tons.

The countries will also establish an agriculture working group under the new trade council, with its first meeting expected before the end of the year.

Energy trade is another part of the agreement. China will import 10 million metric tons of US coal annually in 2027 and 2028, according to the White House. That would account for about 2% of China’s annual coal imports. US liquefied natural gas and oil were not included in the list.

The arrangements extend beyond traditional trade. The two countries have agreed to establish a communication channel for artificial intelligence related incidents and hold another dialogue by the end of November.

China will also consider approving foreign financial institutions, including US backed firms, to operate and open branches in the country. Washington and Beijing will meanwhile continue discussions on increasing direct flights between the two countries.

What’s next

The immediate focus will be on implementing the agreements reached at the presidential summit.

The agriculture working group is expected to meet before the end of the year, while the AI dialogue is due to continue by the end of November. The two countries will also use the new trade council to discuss tariffs, investment, market access and regulatory concerns.

The extension runs until January 10, giving negotiators another two months to evaluate whether the existing arrangements are being implemented and determine what further agreements can be reached.

Whether the two sides can turn the temporary truce into longer-term trade arrangements will depend on progress across the different areas covered by their negotiations, including tariffs, agricultural purchases, investment and technology.

With information from Reuters,

Britain is seeking a closer economic relationship with the European Union by asking to participate in the bloc’s “Made in Europe” industrial strategy, as Prime Minister Andy Burnham argues that the UK and EU face many of the same economic and industrial challenges.

Travelling to New York for his first United Nations General Assembly as prime minister, Burnham said Britain would seek to become a “trusted partner” in the initiative, which is intended to strengthen European production and reduce dependence on Chinese components.

“Europe’s argument is not with us,” Burnham told reporters on Monday. He said Britain and the EU faced similar pressures, particularly in industries such as steel, and argued that the UK should not face unintended consequences from a policy aimed at addressing dependence on China.

The British government has warned that excluding UK companies could disrupt established supply chains and create additional trade barriers between Britain and EU member states.

Why Britain wants access

The EU’s Made in Europe initiative is part of a broader effort to increase domestic industrial capacity and reduce reliance on overseas supply chains, particularly those involving China.

For Britain, exclusion could have consequences for sectors that remain closely integrated with European markets. The automotive industry, for example, relies on supply chains that cross the English Channel in both directions. Industry representatives have warned that excluding British manufacturers from European incentives and procurement opportunities could affect the competitiveness of both British and European companies.

British officials therefore want the EU to treat the UK as a partner in the initiative rather than as an external supplier.

Burnham has argued that British participation would reflect the practical connections that remain between the UK and European economies despite Brexit.

A wider attempt to rebuild UK EU ties

The dispute over Made in Europe is taking place as Burnham’s government seeks to deepen Britain’s relationship with the EU.

The UK government has already been pursuing closer cooperation with European countries in areas including defence, technology and manufacturing. Finance Minister John Healey recently urged EU counterparts not to exclude Britain from the bloc’s industrial strategy.

The government has also been seeking greater cooperation on European security. However, negotiations over British participation in the EU’s SAFE defence fund broke down, creating another obstacle to the government’s efforts to expand cooperation with Brussels.

Burnham has said he wants to move further and faster in rebuilding ties with the EU. His government has also been working toward a UK EU summit that was delayed following the change in prime minister.

The challenge inside Europe

Britain’s request for access is not simply a matter of negotiating with EU institutions. Member states also have different interests in how far the bloc’s industrial policies should extend to non member countries.

The proposed policy is intended to direct European economic activity toward European production and strengthen industrial resilience. Extending its benefits to British companies could therefore raise questions about what obligations Britain would have in return and how EU based businesses would compete with UK firms.

There are also broader questions about the meaning of the UK’s post Brexit relationship with the bloc. The British government is seeking closer economic and security cooperation without reversing the country’s decision to leave the EU.

That creates a difficult balance. London wants greater access to European programmes and markets, while Brussels must determine the conditions under which a non member state can participate in policies designed partly to strengthen the EU’s own industrial base.

What comes next?

Burnham’s immediate objective is to secure British participation in the Made in Europe framework while avoiding new barriers for industries whose supply chains remain closely connected to the continent.

The issue could become part of wider negotiations over the future of UK EU relations. Burnham has said his focus is on a renewed summit with European leaders, which he hopes can take place before the end of the year.

The outcome will indicate how far Britain and the EU can move toward closer economic cooperation without reopening the fundamental question of Britain’s membership.

For London, the argument is that Britain and Europe face shared challenges from global supply chain disruption and dependence on foreign production. For the EU, the question is how to strengthen European industrial capacity while determining the appropriate role for a neighbouring non member economy.

The debate over Made in Europe therefore reflects a broader post Brexit question: how closely can Britain integrate with European economic and security structures while remaining outside the bloc?

With information from Reuters.

The fourth China-Africa Peace and Security Forum was held in Beijing, China, from September 15 to 17, 2026, coinciding with the 13th Xiangshan Forum and the 70th anniversary of the establishment of diplomatic relations between China and African countries. Military representatives and defense officials from the African Union and 41 African nations participated. This expansion of bilateral military relations between Beijing and African countries comes at a time when Beijing and Washington are vying for influence on the African continent, while African nations seek to diversify their partners and strengthen their security capabilities, particularly in regions facing escalating threats, such as the Horn of Africa. The fourth China-Africa Peace and Security Forum, held in Beijing, represents a pivotal milestone reflecting the growing military and defense cooperation between China and 41 African countries, along with the African Union, as Beijing seeks to solidify its security presence on the African continent.  The most prominent theme of the forum and defense cooperation was the speech by Chinese Defense Minister Admiral Dong Jun, who called for deepening strategic coordination and developing mechanisms for defense exchange and maritime security based on equality and mutual benefit, without political dictates or conditions, between China and African countries. This reflects the growing African interest in partnership with China, driven by a desire to diversify military options and avoid the pressures and conditions associated with Western and American partnerships. The China-Africa Peace and Security Forum witnessed the signing of bilateral memoranda of understanding to enhance military capabilities, training, and the exchange of expertise between China and some participating countries, such as Mauritania.

The fourth session of the China-Africa Peace and Security Forum, held in Beijing, China, witnessed a significant deepening of bilateral military cooperation between China and Africa. On the sidelines of the forum, the Islamic Republic of Mauritania and the People’s Republic of China signed two memoranda of understanding to strengthen and develop military cooperation between the two countries. This signing took place during a meeting between Mauritanian Defense Minister Hanan Ould Sidi and his Chinese counterpart, Admiral Dong Jun.  The most prominent areas of the memoranda of understanding included strengthening military and security capabilities to address challenges in the Sahel region and Africa, particularly combating terrorism and organized crime. They also focused on military education and training for African military personnel and the exchange of expertise, intelligence, and security experiences between the two sides. This move is part of a broader Chinese strategy to enhance defense partnerships with African countries (with representatives from 41 nations participating), emphasizing joint military training and coordination.

In this context, cooperation between the Chinese People’s Liberation Army and African armies is steadily increasing, encompassing training, counter-terrorism exercises, and peacekeeping operations.  The most prominent forms and areas of military cooperation between China and Africa include joint military exercises, where the Chinese army conducts joint drills with African countries, such as the Peace Unit exercises with Tanzania and Mozambique to combat terrorism on land and at sea. This cooperation also encompasses peacekeeping and assistance efforts, with China participating in numerous UN peacekeeping missions in Africa and deploying warships to combat piracy off the coast of Somalia. Simultaneously, there is an increase in military education and training programs, with Chinese military academies hosting African leaders, defense ministers, and officers to enhance professional exchanges and build long-term strategic relationships. To this end, China regularly organizes the China-Africa Peace and Security Forum to strengthen defense coordination and consultation with various countries on the continent. The objectives of the Chinese military presence in Africa include modernizing African military expertise, providing the People’s Liberation Army with field operational experience in diverse and complex security environments, and protecting Chinese interests and securing massive Chinese investments and economic projects related to the Belt and Road Initiative. With increasing practical cooperation between China and Africa, Beijing is bolstering its diplomatic and strategic influence on the African continent in the face of international competition with Washington.

China’s military presence in Africa can be summarized as achieving three major strategic objectives, such as modernizing African military expertise, providing the Chinese People’s Liberation Army with field experience, and protecting the substantial investment interests of China’s Belt and Road Initiative. These three objectives and their shared benefits can be detailed as follows:

1) Modernizing African Military Expertise:

China seeks to present itself as a reliable and alternative security partner for African countries through various modernization mechanisms, including:

– Technology Transfer and Training: By providing advanced training programs for African officers at Chinese military academies and transferring modern tactical and operational knowledge.

– Defense Infrastructure Development: By contributing to the construction of bases, logistics centers, and training facilities for African armies.

– Arms and Equipment Sales: By supplying African countries with modern weapons systems at competitive prices, such as drones, armored vehicles, and communication systems, thereby enhancing the combat effectiveness of these armies.

– Counterterrorism and Counter-Piracy: By building joint capabilities between the Chinese People’s Liberation Army (PLA) and local African armies to counter unconventional security threats in conflict zones and maritime piracy areas, such as the Gulf of Aden.

2) Gaining Field Operational Experience for the PLA

The diverse and complex African security environment represents an important real-world testing ground for the Chinese military, which lacks modern field combat experience outside its borders. This benefit is achieved through:

– Testing Chinese weapons, military equipment, and armaments: By experiencing the effectiveness and quality of Chinese weapons and military equipment in harsh climatic and geographical environments (desert, tropical).

– Remote Operations Management: Developing the ability to command and control forces across vast geographical distances and testing the effectiveness of cross-border supply and logistics.

– Participation in peacekeeping forces: China’s extensive involvement in UN peacekeeping missions in Africa, such as in Mali, South Sudan, and the Central African Republic, provides Chinese officers with experience interacting with international militaries and managing complex security crises.

– Naval and operational presence: Utilizing the Chinese military base in Djibouti as a launchpad for evacuation operations, counter-piracy efforts, and protecting shipping lanes enhances the flexibility of the Chinese navy.

3) Protecting interests and securing investments under China’s Belt and Road Initiative

Africa is a key pillar of China’s Belt and Road Initiative, and the military role in protecting these massive Chinese investments is complemented by:

– Securing critical infrastructure: Protecting ports, railways, mines, and energy fields financed and operated by Chinese companies against any political instability or terrorist attacks.

– Securing Maritime Routes: Ensuring the safety of vital maritime trade routes for transporting raw materials from Africa to China and Chinese goods to global markets via the Red Sea and the Bab el-Mandeb Strait.

– Protecting Chinese Communities: Providing security and rapid intervention capabilities to evacuate thousands of Chinese workers and citizens from African conflict zones when necessary.

From the preceding presentation and analysis, we understand the importance of the China-Africa Peace and Security Forum in strengthening defense exchange mechanisms, defining and deepening regional cooperation in maritime security, combating terrorism and extremism, and building defense capabilities in emerging areas to address escalating security risks on the African continent, such as the Sahel region. The Forum provides an opportunity to enhance consultation and exchange views between China and African countries on various peace and security issues and to develop prospects for cooperation between China and African countries in related fields. China-Africa cooperation encompasses military training, naval exercises and patrols, counter-terrorism, mine clearance, and securing shipping lanes, as well as the transfer of expertise and technology and the marketing of Chinese weapons.

The European Union is preparing to use a broader range of economic measures to reduce what European Commission President Ursula von der Leyen described as an unsustainable trade deficit with China.

Speaking to the European Parliament on Wednesday, von der Leyen said the imbalance had reached a critical point, with the EU running a goods trade deficit with China equivalent to around €1 billion ($1.15 billion) a day last year.

She warned that Europe was experiencing what she described as a second “China shock”, with growing Chinese industrial exports contributing to pressure on European manufacturing and raising concerns about deindustrialisation.

Europe seeks concrete results

The issue has become a priority in EU China relations as European governments seek to address the growing imbalance through negotiations as well as economic policy tools.

EU leaders asked the European Commission in June to deliver results from its dialogue with Beijing and ensure that the bloc had sufficient instruments to protect its economic interests.

European Trade Commissioner Maros Sefcovic, who is leading the discussions, has said he wants tangible progress by October.

Von der Leyen said cooperation remained in both sides’ interests but warned that the EU was prepared to move beyond dialogue if negotiations failed to produce results.

“We will use all the tools at our disposal to rebalance our relationship,” she said.

The approach reflects a broader European effort to reduce economic vulnerabilities without completely severing commercial ties with China, one of the EU’s most important trading partners.

Critical minerals add to concerns

Trade is not the only area creating pressure on the relationship. The EU also remains heavily dependent on China for several critical raw materials, including rare earth elements that are essential for industries such as electronics, renewable energy, defense and advanced manufacturing.

Von der Leyen said the EU needed to accelerate efforts to secure supplies and build strategic reserves.

The European Commission plans to establish a European corporation focused on critical raw materials to help the bloc secure and stockpile essential resources.

What’s next

The EU’s approach is likely to combine negotiations with measures aimed at strengthening its own industrial capacity and reducing dependence on Chinese supply chains.

For Beijing, the growing European focus on trade imbalances, industrial competition and critical minerals could create additional pressure to make concessions while preserving access to the European market.

For the EU, however, reducing the deficit will require more than trade restrictions. Europe will also need to expand domestic production, diversify suppliers and address the competitiveness challenges facing its own industries.

The October deadline for trade talks could therefore become an important test of whether Brussels and Beijing can reach practical agreements or whether the EU moves toward a more defensive economic relationship with China.

With information from Reuters.

Central banks’ record, price-insensitive gold buying is a more credible signal of the dollar’s structural trajectory than this year’s currency markets, because FX markets are structurally bad at pricing the discontinuous, wartime-style tail risk central banks are actually hedging — so this autumn’s calmer dollar should not reassure anyone that de-dollarization has stalled.

In June, the European Central Bank made an announcement most people missed: gold has overtaken US Treasuries as the world’s single largest reserve asset. Central banks bought 289 tonnes of it in the second quarter alone — a record for that quarter and five times Q1’s pace — with Poland’s central bank openly telling investors it was “buying the dip.” Here is the part that should stop you: gold’s price fell 22% between January and September. Central banks were never more convinced buyers of an asset than while it was crashing. Either the reserve managers are wrong, or currency markets — which show none of this urgency — are the ones asleep at the wheel.

Gold peaked at $5,589 an ounce on 28 January, the same month the dollar index hit a four-year low of 95.5 and the dollar’s share of global reserves fell toward its lowest level since 1995. Both moves reflected the same story: Fed rate cuts through 2025, a US debt load past $37 trillion, and BRICS states settling more trade outside the dollar. Then the picture split. Kevin Warsh, confirmed as Fed chair in May, signalled a hawkish pivot in August; the Iran war pushed oil and inflation higher through September, and markets began pricing a rate hike rather than a cut. The dollar index clawed back to 99.46. Gold fell to $4,330. Central-bank buying did not follow the price down — Poland alone added 82 tonnes this year toward a 700-tonne target, and a World Gold Council survey found a record 45% of central banks plan to buy more within twelve months.

State the gap plainly. Two signals, same underlying question — is the dollar-centred monetary order changing — and they disagree by a wide margin. The buying signal says yes, decisively: record quarterly purchases, gold displacing Treasuries at the ECB’s own reckoning, 74% of surveyed reserve managers expecting the dollar’s reserve share to keep falling over five years, and buyers adding tonnage through a 22% drawdown rather than fleeing it. The price signal says not yet: the dollar just posted one of its sharper rallies of the year, gold is down sharply from its high, and nothing in currency markets shows the kind of stress a genuine regime shift would produce.

The strongest objection to trusting the buying signal is a good one, and it needs to be taken seriously rather than waved away: foreign exchange is the deepest, most liquid market in the world, turning over more than $7 trillion a day. A few hundred tonnes of central-bank gold buying — perhaps $30–40 billion a quarter — is a rounding error against that. If professional currency traders, sitting on far more capital and far better short-term information than a handful of reserve managers, saw a serious de-dollarization story unfolding, it would already be in the price. Instead the dollar just rallied. On this view, central banks are not seeing something markets are missing; they are pattern-matching off 2022, when Russia’s $300 billion in reserves was frozen overnight, and over-hedging a tail risk that has not recurred and mostly will not.

That objection assumes FX markets and central-bank reserve committees are pricing the same kind of risk, on the same time horizon, and they are not. Currency markets are exceptionally good at pricing continuous, high-frequency variables — rate differentials, growth surprises, this week’s inflation print — because that is what moves flows daily. They are structurally poor at pricing discontinuous, low-probability events until those events occur: equity volatility did not price 2008 in 2007; sovereign spreads did not price the Russia reserve freeze in the weeks before it happened. A reserve freeze, a secondary-sanctions campaign, or exclusion from SWIFT-style settlement infrastructure is exactly that kind of event — binary, rare, and catastrophic for whoever it hits — which is precisely why Poland’s central bank governor, Adam Glapiński, described his buying not as a trade but as insurance: reserves that keep the state secure “under all circumstances, including wartime, which of course we’re not expecting.” That is not the language of someone chasing momentum. It is the language of someone who manages the one asset class that keeps its value if their country is ever cut off from the dollar system, and who would rather hold it and be wrong for a decade than not hold it and be wrong once.

The buying pattern itself supports that reading. Momentum money sells into a 22% drawdown; insurance money adds to it. Central banks did the latter through the first half of this year, which is the behavioural signature of a structural reallocation program with a fixed multi-year target — Poland’s is explicit, 700 tonnes — not speculative flow riding gold’s rally. Meanwhile the dollar’s autumn recovery has an identifiable, largely cyclical cause: a new, more hawkish Fed chair and a war-driven oil shock forcing a rate-hike repricing. Neither event reverses the debt trajectory, the BRICS settlement trend, or the reserve-freeze precedent that pushed the dollar to a four-year low in January. A rally built on this year’s Fed chair and this year’s war is not proof that last year’s structural story is over; it is evidence that a cyclical force is currently strong enough to mask it.

The Scenarios

Base case (55%): The gap persists rather than resolves. The dollar holds most of its autumn gains through the current rate-hike cycle, gold range-trades below its January peak, and central banks keep buying at a steadier, slower pace toward stated targets like Poland’s 700 tonnes. Nobody is “proven right” on any particular Tuesday, because reserve diversification is a decade-scale hedge, not a trade with a catalyst date. This is the least satisfying outcome for anyone wanting a verdict, and the most likely one.

Downside case (for dollar holders): A discrete trigger — a fresh reserve-freeze or secondary-sanctions episode, plausibly connected to the still-live US-Iran war spilling into action against a third country’s assets, or a shock to Fed independence under a more political Warsh chairmanship — crystallizes the exact tail risk central banks have been hedging. Gold spikes back through its January high, the dollar index breaks below its 95.5 low, and the gap closes in weeks rather than years, vindicating the reserve managers all at once and catching FX markets flat-footed exactly as the theory predicts.

Upside case (for the dollar): The Iran war resolves, Warsh’s rate hikes cool inflation without a recession, US fiscal metrics stabilize, and BRICS local-currency settlement growth stalls on friction between its own members. Central-bank gold buying does not reverse but plateaus as reserve managers hit conventional diversification ceilings — most target 15–20% of reserves in gold, not open-ended accumulation. The gap closes gradually as price drifts up toward the buying signal over several years, with no crisis required to force the reconciliation.

The Takeaway

The dollar’s calmer autumn is not evidence the de-dollarization hedge was a mistake; it is evidence that currency markets and central-bank reserve committees are pricing two different things on two different clocks, and only one of those clocks rings in a crisis. Central banks bought through a 22% drawdown because the point of the position was never this quarter’s return.

Watch for: the World Gold Council’s Q3 2026 Gold Demand Trends report, expected in early November. A third consecutive quarter of buying that ignores price direction will confirm this is policy, not opportunism — and the moment currency markets have to agree with that policy will not be a quiet one.

Egypt can leverage the US-China rivalry and its strategic partnership with Beijing to bolster its national security and its position as a global logistics hub through several strategic avenues:

1) Enhancing its status as a global logistics and trade center, through:

– Developing the Suez Canal Economic Zone: Leveraging the massive Chinese investments and projects in the TEDA zone in Ain Sokhna to establish vital industries such as green hydrogen, solar panels, and electric vehicles, transforming Egypt from a mere waterway into a global manufacturing and logistics hub.

– Linking the Belt and Road Initiative with Egypt’s Vision 2030: Integrating Egyptian ports, such as East Port Said, Alexandria, and Ain Sokhna, into the Chinese maritime trade network, while maintaining a balance that allows for alternative investments in other ports and logistics corridors to expand its options and international network of allies.

– Alternative Supply Chains: Egypt offers a secure regional base for global and Chinese companies seeking to diversify their supply chains away from areas of direct conflict, leveraging its strategic location connecting three continents.

2) Enhancing National Security and Red Sea Security, through:

– Diversifying Sources of Armament and Military Technology: The partnership with China allows Egypt to acquire advanced military technology, such as drones, air defense systems, and space and satellite technology, without the stringent political conditions imposed by Washington, thus strengthening the independence of Egyptian military decision-making.

– Securing Navigation in the Red Sea and the El-Mandeb Strait: This can be achieved by utilizing the Chinese military presence in Djibouti and China’s interest in maritime security to coordinate and build a joint security umbrella protecting the Suez Canal from emerging threats, such as attacks in the Red Sea, given that the stability of this waterway is a vital shared interest for both Egypt and China.

– Balancing Political Pressures: By employing flexible diplomacy and strategic balancing, Egypt’s rapprochement with China (especially after joining the BRICS group) provides it with strong leverage in its negotiations with the United States and Western international institutions, and vice versa.

3) Egyptian Expansion and Influence in Africa via China, through:

The Joint Projects (Triangular Cooperation) by acting as a strategic gateway for Chinese investments directed towards the African continent, through the implementation of joint infrastructure projects (roads, power plants, dams) in cooperation between Egyptian and Chinese companies in the Nile Basin and Horn of Africa countries, Egypt can enhance its influence and development diplomacy.

Here, Egypt can benefit from international and Chinese competition over Africa, the Red Sea, and Ethiopia, and from its partnership with China, to strengthen its national security and its position as a logistical and commercial hub. Thus, Chinese economic influence can become a factor of stability and development for Egypt, rather than a new arena for international competition in the future.  Egypt can enhance its national security and logistical standing by leveraging its unique strategic location as a link between Africa, Asia, and Europe and by transforming international competition and its partnership with China into well-considered development opportunities. This can be achieved by studying and understanding the following strategic dimensions:

– First: Mechanisms for Egypt to Benefit from International Competition and the Chinese Partnership

– Developing Global Logistics Hubs: Continuing to expand and develop the Suez Canal Economic Zone in conjunction with Chinese investments, such as the TEDA Zone in Ain Sokhna, to transform the canal from a mere waterway into a global manufacturing and re-export hub.

– Continental Connectivity and Infrastructure: Leading regional connectivity projects in Africa, such as the Cairo-Cape Town Highway and the Lake Victoria-Mediterranean Waterway Project, and utilizing funding from China’s Belt and Road Initiative to connect African trade to the Red Sea.

– Diversifying security and military partnerships: Leveraging international competition in the Red Sea to secure navigation and combat piracy and terrorism through building flexible alliances and modernizing Egyptian naval capabilities (the Berenice naval base) without aligning completely with any single international power.

– Localizing industry and technology: Making technology transfer and the localization of industries, such as electric vehicles, renewable energy, and communications, a requirement in investment contracts with China and Western countries. This will reduce reliance on imports and bolster Egyptian economic security.

– Second: Chinese Economic Influence: Stability and Development or an Arena of Competition? Future indicators of Chinese influence in Egypt and the region point to two overlapping scenarios:

– The first scenario: A factor of stability and development, achieved by focusing on infrastructure, providing soft loans, creating local job opportunities, and supporting regional integration. This would have a positive impact on Egypt and Africa, contributing to easing conflicts stemming from poverty and offering African countries alternative financing options for developing their economies.

– The second scenario: Chinese influence within Africa as a negative factor, transforming it into a new arena of international competition. Increased Western (American and European) fears of Chinese hegemony and attempts to contain it through counter-initiatives or political pressure could turn the Red Sea region and Africa into areas of military and political polarization, forcing countries to choose between the Eastern and Western blocs.

– Third: Analyzing China’s role regarding the Grand Ethiopian Renaissance Dam (GERD) issue and whether Beijing can play a role in supporting stability and negotiations between Egypt and Ethiopia

On the other hand, given China’s growing relations with Ethiopia and the Nile Basin countries, its role regarding the GERD issue can be viewed positively for Egypt. Beijing can play a role in supporting stability and negotiations, even though its economic interests might make it more cautious about clashing with Ethiopia. Here, China adopts a pragmatic and cautious approach, balancing its substantial economic interests in Ethiopia with its strategic relationship with Egypt. This limits its role to quiet diplomacy and calls for negotiations without exerting direct pressure or engaging in confrontation with Addis Ababa. This can be understood through:

1) Analyzing China’s role regarding the GERD

– Technical and financial support: Chinese companies and funding have contributed directly to the infrastructure and electricity distribution stations associated with the GERD and Ethiopian projects.

– Non-interference policy: Beijing traditionally adheres to the principle of non-interference in the internal affairs of other countries and avoids taking public stances against Ethiopian development projects.

– Diplomatic balance: China is careful to issue joint statements with Egypt emphasizing the importance of international law and the need to avoid harming water security, but these remain diplomatic statements that fall short of exerting pressure through mediation.

2) Can Beijing support stability and negotiations between Egypt and Ethiopia?

– The capacity exists: China possesses significant economic and financial influence over Ethiopia, enabling it to exert influence if it so desired, given the scale of its investments and loans.

– The will to exert pressure is lacking: China refuses to become a serious mediator or a pressure party and prefers to distance itself from the sharp points of contention between Egypt, Ethiopia, and Sudan.

– Maximum possible role: Beijing’s available role is limited to quiet mediation and encouraging the parties to return to regional negotiating tables without imposing binding solutions.

3) Economic interests and avoiding confrontation:

– Deep strategic partnership: For China, Ethiopia is a key gateway and the heart of Africa ​​for implementing the Belt and Road Initiative and penetrating the Horn of Africa.

– Interconnected projects: Chinese interests in Ethiopia are linked to agricultural, electricity, and railway projects that directly benefit from the dam’s energy.

Here, we conclude that major economic interests make China very wary of losing its Ethiopian ally, which keeps its position biased towards avoiding confrontation and refraining from imposing any forced settlement on it.

From this, we understand that Chinese influence holds enormous developmental potential for Africa, but it remains surrounded by the risks of geopolitical competition with other powers, most notably the United States.  Egypt’s ability to achieve diplomatic balance and rely on a policy of multiple partners is the guarantor of transforming this influence into a stabilizing factor that supports its national security.

The People’s Republic of China achieved a historic and unprecedented participation in the second edition of the El Alamein International Aerospace Exhibition (EIAS 2026), which was held at El Alamein International Airport from September 8 to 10, 2026. The Chinese participation came just days after the conclusion of the joint Egyptian-Chinese air force exercises Eagles of Civilization 2026. The significance of this Chinese military presence lay in the display of a fully integrated and realistic combat air system, not merely models. In this context, the Egyptian researcher will attempt to divide the significance of China’s participation in the El Alamein Air Show into several key areas, including:

– First: China’s prominent participation in the El Alamein International Air and Space Show in Egypt as a strategic shift in the regional arms market

Here, China’s extensive participation in the El Alamein International Air and Space Show constitutes a significant strategic shift in the regional arms market. Beijing has moved beyond the traditional approach of selling individual military components to present itself as a supplier of comprehensive and integrated air combat systems, competing with Western and American powers in the Middle East and Africa. China’s participation in the El Alamein International Air and Space Exhibition focused on several strategic axes to promote and analyze the concept of a full-suite solution. This was achieved by emphasizing that China does not simply sell aircraft but rather offers a comprehensive defense solution, encompassing attack fighters, logistics support aircraft, aerial refueling, and command and control systems, known as C4ISR.

The People’s Liberation Army of China sought to highlight China’s military and defense role and promote the Chinese model as a ready-made competitive alternative. This was done by showcasing the competitive advantages of Chinese defense industries, such as the absence of complex political conditions, rapid delivery, and comprehensive technology transfer to Middle Eastern and African markets. Furthermore, the focus was on the geopolitical depth, linking the Chinese presence in El Alamein to Beijing’s broader vision of strengthening security and economic partnerships with countries in the region.

– Second: Showcasing the most prominent Chinese aircraft platforms participating for the first time outside of China at the El Alamein exhibition

As for the most prominent Chinese aircraft platforms participating for the first time outside of China, for the first time in its history, the People’s Liberation Army Air Force (PLAAF) showcased four of its latest operational aircraft models at an air show outside of China. The most prominent of these were

– The Chinese J-16 multirole fighter (J-16)

This air superiority and heavy ground attack fighter garnered widespread international attention.

– The Chinese YY-20A aerial refueling tanker (YY-20A)

This Chinese heavy transport aircraft provides refueling to extend the operational range of fighter jets.

– The Chinese KJ-500 airborne early warning and control aircraft (KJ-500)

This represents an airborne command and control system.

– The Chinese Z-20K military helicopter (Z-20K)

This is a multi-role helicopter designed for search and rescue and tactical operations.

Regarding the Chinese weapons and drones on display at the El Alamein International Air and Space Exhibition, the AVIC (Aerospace Industries of China) showcased its advanced defense capabilities in the outdoor exhibition area through:

– A demonstration of the Chinese Wing Loong-10B stealth drone (Wing Loong-10B):

This is a high-altitude, long-range unmanned aerial vehicle (UAV) designed for reconnaissance and precision strikes.

– A demonstration of Chinese smart munitions and missiles:

The Chinese drone was displayed surrounded by advanced air-to-air missiles, such as the PL-108 & PL-12AE. In addition to a demonstration of the Chinese anti-radar and anti-radiation missile (YJ-9ER1).

– Third: The Chinese People’s Liberation Army (PLA) showcased its capabilities through a technical display (capability integration), dividing its export-available air systems into functional groups for attack, others for support and refueling, and a third group for command and control, during China’s extensive participation in the El Alamein Air Show in Egypt.

In this context, the PLA sought to leverage China’s extensive participation in the El Alamein Air Show in Egypt as a new and strategic launchpad for China in North Africa. This included showcasing the size of the Chinese pavilion and the equipment on display, such as aerobatic aircraft and unmanned combat aerobatics. The Chinese Ministry of Defense emphasized the technical aspects of this capability integration display, highlighting the division of its export-available air systems into functional groups for attack, others for support and refueling, and a third group for command and control. As follows:

■ The offensive functional groups were represented by a display of China’s modern fighter jets and attack drones, such as the Wing Loong family.

■ As for the support and refueling functional groups, China’s strategic transport and aerial refueling aircraft, such as the Y-20, were showcased.

■ The third functional group focused on (command and control), with China displaying its early warning aircraft and airborne command centers.

– Fourth: Analyzing and understanding the strategic dimensions of China’s participation in the El Alamein International Air and Space Exhibition, aimed at attracting more interest in the Chinese aerospace sector and promoting widespread military sales of Chinese military, defense, and armament equipment

Thus, we can analyze and understand the strategic dimensions of China’s participation in the El Alamein International Air and Space Exhibition, which aimed to attract more interest in the Chinese aerospace sector and promote widespread military sales of Chinese military, defense, and armament equipment. Therefore, we find that the extensive Chinese presence at the El Alamein International Air and Space Exhibition constitutes a genuine breakthrough. Beijing did not aim to promote individual pieces but rather to demonstrate its ability to provide a comprehensive and integrated air combat system, encompassing attack, support, refueling, and command, as a competitive alternative in the Middle Eastern and African markets.

Analyzing the economic and strategic dimensions of China’s extensive participation in the El Alamein exhibition, we observe the extent to which the Chinese People’s Liberation Army focused on achieving broad military exposure for its participation during the exhibition. This included showcasing how these Chinese defense, military, and air systems can reduce operating costs for purchasing countries while ensuring their independence in defense decision-making, without imposing political conditions or prior operational restrictions, unlike many Western and American systems.

Authors: Janvi Singhi and Kanav Sharma*

BRICS is moving into a more meaningful phase in its evolution. Its larger membership, considerable resources, population, and markets position it as a voice for the global south. Nevertheless, the fact that the BRICS is economically big does not guarantee that it will turn into a powerful organization. The difficult question is whether BRICS will be able to use the potential of its diversified members to create the institutions and means of collaboration that will meet the needs and interests of different countries, businesses, and banks.

This is where the next chapter of BRICS collaboration will be decided. It is definitely not in need of aspiration. The main question is not whether BRICS will develop a common geopolitical approach but whether BRICS will be able to simplify the issues of cooperation for countries with divergent economic interests and institutional capabilities.

The enlargement of BRICS has brought about both a chance and an enigma. An increased number of members boosts the economic and diplomatic power of the group, but it also entails the presence of more currencies, regulations, economic systems, and foreign policy priorities. States such as India and China may share a desire to amplify the role of developing economies while being in competition with regard to trade, technology, and geopolitics. Resource-rich countries may have their priorities with respect to the manufacturing countries. Financial centers may deal with payment integration differently from countries interested in getting more monetary independence.

The key challenge before BRICS is not about making all the members agree about everything; rather, it is about creating means for cooperation between different countries in the areas where their interests coincide.

This differentiation is essential because BRICS is frequently assessed based on scale indicators, including population, economic output, energy resource reserves, and trade. While these parameters demonstrate the affiliation, the affiliation is not the key to institutional power. BRICS is still functioning as an informal coordinating mechanism and not as a supranational institution due to the absence of an establishing treaty, budget, and secretariat. The conversion of its total economic capabilities into total actions should rely substantially on its members’ coordination. BRICS needs to change its approach, so instead of pursuing expansion, it should focus on implementation.

The issue of cross-border payments can serve as an example. The necessity to improve payment processes within BRICS may be easily explained. International transactions require correspondent banks, multiple currencies, currency exchange, and several commissions. Using local currencies and interoperable payment systems may help reduce some of these expenses and create additional ways of settlements for countries.

However, establishing a new financial structure is much more difficult than just talking about it. The real barriers are technical and institutional: interoperability between national payment systems, regulatory compatibility, foreign exchange liquidity, cybersecurity, anti-money laundering and know-your-customer norms, settlement systems, and trust among the entities participating in the payment system. A domestic payment system cannot simply be hooked up to a foreign payment system without addressing these problems. This leads us to a more practical goal for BRICS countries. Instead of concentrating on the joint BRICS currency, they should work on interoperability among national payment systems.

The example of India’s UPI-PayNow linkage to Singapore shows how this principle works. Two entirely different payment systems can be interlinked without destroying their own systems. The same gap can be figured out at the level of BRICS if all necessary regulations, settlements, and risk management conditions are fulfilled. In order to understand how this can be achieved, BRICS can refer to the examples of other countries that have already applied the same logic.

The same issue of coordination can be observed in trade and supply chains as well. BRICS countries have complementary assets such as resources in energy, agriculture, manufacturing, minerals, technology, and large markets for consumer goods. However, having complementary resources does not automatically result in integrated supply chains.

Businesses need predictable customs, standards that will fit one another, reliable logistics, availability of finance, and clarity of regulation. If countries have different certification systems, digital documents, and technical standards, the theoretical advantages of a large BRICS market will not be fully realized. Therefore, standards will probably prevail over declarations in the end.

So far BRICS has spoken about cooperation of national standard organizations and overcoming technical barriers between trade. Further work is getting cooperation of national standard organizations transferred into standards that will be in demand in real business. Common standards for digital trade documents, selected product certification, customs data, payment systems, and technical standards can connect BRICS economies without full harmonization of their economies.

This method would make it easier to justify politically. There would not be a need for members to give up their power when it comes to buying a wider range of economic policies. The only thing left is for countries with technology to agree on their particular rules where technology will help provide measurable benefits.

The same goes for agricultural projects, as the BRICS countries share similar problems in the fields of food supply, climate, water conservation, and productivity. The BRICS has started pushing for agricultural research and cooperation. So, the question is not whether the BRICS countries have recognized these areas; they already have. The larger question is whether anything can be implemented across borders.

In a situation where one country has effective technology to grow crops and another one has a good way of bringing the crops to a field, BRICS has to find a way to transfer that knowledge or have an organization that can help in that transfer. There should be a value on the moves made regardless of whether formal treaties have been produced or not. This points towards a different institutional model for BRICS: modular cooperation.

BRICS needs to develop a model that allows all members to be part of the major framework and subgroups of interested members cooperating with each other in specific areas that require deep integration. Countries interested in making payments and settlements between them could organize a coalition in charge of finding and implementing technical solutions for that. Those ready to work jointly in the field of agriculture can proceed with agricultural cooperation, while others can focus on critical minerals, logistics, AI technologies, energy, and development finance.

This model recognizes one uncomfortable truth: diversity is BRICS’ asset, but it also acts as an obstacle in its functioning. In a highly heterogeneous grouping, it is impossible to expect rapid integration in view of the differences among its members. Compliance with the needs of all BRICS states only produces long negotiations and ambitious statements that do not work. Modular cooperation, in its turn, enables countries to pursue their own policy while being part of the larger framework.

Moreover, it could also establish a more trustworthy framework for testing. A limited number of members would be given the opportunity to run an initial test of payment or trading procedures, determine any legal or technological obstacles, and welcome other participants once the system is successful. The outcome would be a lowering of the chances of running into challenges that would be involved in the launch of a full project for all members simultaneously. BRICS should also reconsider its parameters of success.

Rather than concentrating on the number of members or the quantity of agreements accepted, BRICS should focus on the outcomes of its activities. There are political benefits to this strategy as well. BRICS will find it difficult to forge sustainable alternatives simply by selling them as counters in the geopolitical confrontation with the West. Governments and businesses respond not just to geopolitical signals but also to incentives. If the BRICS mechanism is cheaper, quicker, safer, and more efficient, then the chances of adoption increase.

This point is especially important for the discussion of de-dollarization. The reduction of dependence on dollar-based systems may in itself be a rational objective for some members; however, viewing de-dollarization as a success in and of itself can overshadow the distinction between geopolitics and economic efficiency. A payment mechanism can only gain credibility if banks and companies use it to solve a problem at hand.

India’s BRICS presidency in 2026 is an excellent opportunity to work on the practical implementation of the above approach. New Delhi can focus on enhancing cooperation based on interoperability and standards, collaboration of sectors, and measurable results. Instead of trying to create a homogenous group, India can create a framework where willing participants will devise their solutions for implementation by others.

Instead of striving to make BRICS like other supranational bodies, we should acknowledge the fact that, given its diversity of membership composition and structure, it is not realistic nor necessary. BRICS differentials provide a comparative advantage of allowing a mix of countries with both different political and economic systems that nevertheless share aspirations for greater policy autonomy and a voice in international affairs.

BRICS does not need to reach consensus on every issue to become successful. What it requires is to be able to determine areas where cooperation can be beneficial economically and create institutions able to do that.

Thus, the biggest problem is not the absence of power. The problem is how to convert power into capacity and capacity into institutions. If BRICS succeeds in this task, its economic capacity will transform from empty statistics into collective power. If it does not, then enlargement might improve visibility of the group, but its effectiveness would stay at the same level.

*Kanav Sharma is a Public Policy Researcher from Jammu & Kashmir with a postgraduate degree in English Literature from the University of Jammu. His interests include public policy, governance, parliamentary and strategic affairs.

The Strait of Hormuz has become the central pressure point in the escalating confrontation between the United States and Iran. Before the conflict, roughly 20 million barrels of oil moved through the narrow waterway each day, equivalent to about one fifth of global oil consumption. For years, traders could therefore rely on relatively consistent estimates of the volumes passing through one of the world’s most important energy corridors.

That certainty has now disappeared.

The use of “dark crossings,” in which tankers switch off their identification and navigation systems, has made vessel movements increasingly difficult to monitor. Satellite imagery, port records, tanker drafts, loading schedules and shipping data are being used to reconstruct movements, but the information remains incomplete. Recent estimates of Hormuz flows have differed dramatically, leaving traders and governments uncertain about the true scale of oil moving through the waterway.

The uncertainty comes as Brent crude has moved above the $100 a barrel threshold for the first time since July, driven by renewed military escalation and concerns over Middle Eastern oil supplies.

The Hormuz Information Gap

The most unusual feature of the current oil crisis is not simply that supplies may have fallen. It is that markets cannot confidently determine how much oil is actually moving.

U.S. Energy Secretary Chris Wright said more than 17 million barrels crossed the strait on August 31 under U.S. Navy supervision. Shipping intelligence firm Kpler, however, estimated that only around 6 million barrels crossed that day. Kpler put average August flows at approximately 4.3 million barrels per day, with flows rising to nearly 5 million barrels per day during the first days of September.

The difference could partly reflect different methodologies, including whether shipments using alternative routes outside Hormuz are included. Tankers that remain invisible to tracking systems for days or even weeks make the picture even harder to reconstruct.

This means that traders are attempting to price global oil supplies without reliable visibility over one of the world’s most important supply arteries.

Why the Strait of Hormuz Matters

Hormuz is strategically important because of the enormous concentration of energy exports that normally pass through it. Any sustained disruption can affect crude supplies, tanker availability, insurance costs and shipping times, eventually feeding into fuel prices and broader inflation.

The current situation is different from a straightforward blockade. The strait has not necessarily become completely impassable. Instead, its reliability has been severely compromised.

That distinction matters because a tanker does not have to be physically prevented from crossing for markets to react. The possibility that vessels may be delayed, attacked or unable to cross safely is enough to increase the cost of transporting oil.

As a result, the market is responding not only to actual supply losses but also to the risk of future disruption.

Iran’s Strategic Leverage

Iran’s ability to disrupt maritime traffic remains an important source of leverage despite indications that its military capabilities around Hormuz have been weakened.

U.S. demining operations and a growing U.S.-protected shipping corridor along Oman’s coast have allowed more vessels to enter and leave the Gulf. At the same time, Iran-linked forces continue to threaten commercial shipping, meaning Tehran retains the ability to create uncertainty even if it cannot completely shut down the waterway.

This gives Iran a form of asymmetric leverage. Tehran does not necessarily need to close Hormuz completely to impose economic costs. Sporadic attacks, warnings or restrictions can increase insurance premiums, delay shipments and encourage traders to price in a greater possibility of supply disruption.

The renewed attacks on Saudi energy infrastructure have added another layer of risk by threatening alternative routes that have become increasingly important as traffic through Hormuz has declined.

Impact on Global Oil Markets

The immediate consequence is a higher geopolitical risk premium on crude.

Oil prices normally respond to measurable fundamentals such as production, consumption, inventories and transportation. But when the market cannot establish how much oil is moving through Hormuz, uncertainty itself becomes part of the fundamental picture.

This can keep prices elevated even if actual physical supply losses are smaller than feared.

Brent has already moved above $100 a barrel, while analysts and major financial institutions have raised their oil price forecasts as concerns about prolonged disruption increase.

For oil-importing countries, sustained high crude prices could translate into higher fuel and transportation costs, increased inflationary pressure and greater economic uncertainty. Airlines, manufacturers and businesses dependent on energy-intensive supply chains would also face higher operating costs.

Economic and Geopolitical Implications

The crisis demonstrates how vulnerable the global energy system remains to a single strategic chokepoint.

For the United States, maintaining freedom of navigation through Hormuz is not simply a military objective. It is also essential to preventing a regional conflict from becoming a wider global energy crisis.

For Gulf producers, the challenge is equally significant. Even countries with substantial production capacity cannot fully compensate for disrupted shipping if export routes remain vulnerable.

For major Asian importers, the risks are particularly serious because much of the energy normally passing through Hormuz is destined for Asian markets. A prolonged disruption could therefore create significant pressure on import bills, currencies and inflation across energy-dependent economies.

The crisis also highlights the limits of alternative routes. Pipelines and routes outside Hormuz can reduce some of the pressure, but they cannot immediately replace the enormous volumes that normally pass through the waterway.

What’s Next?

The key variable is whether the confrontation between Washington and Tehran moves toward negotiations or further escalation.

A diplomatic breakthrough could rapidly reduce the geopolitical risk premium by restoring confidence in shipping and improving visibility over oil flows. A further escalation, however, could produce additional attacks on tankers, restrictions around the Gulf or renewed pressure on alternative shipping routes.

The oil market will therefore be watching tanker movements as closely as military developments.

If shipping activity becomes more visible and flows recover, some of the current premium could disappear. If the information blackout continues, traders may continue pricing the possibility of a much larger supply disruption.

Analysis

The deeper significance of the Hormuz crisis is that information itself has become a strategic commodity.

Modern energy markets have traditionally depended on the ability to monitor ships, cargoes and supply chains with increasing precision. Satellite imagery, tracking systems and port data created an assumption that physical oil flows could be observed and measured with reasonable accuracy.

That assumption is now being challenged.

The result is a market where perception can influence prices almost as powerfully as physical shortages. If traders believe Hormuz is becoming less reliable, they will pay more for crude today even without definitive evidence of a catastrophic supply loss.

This gives Iran an important form of strategic leverage. The threat of disruption can generate economic consequences even when actual disruption remains limited.

At the same time, Washington faces a difficult calculation. Greater military protection may help keep shipping moving, but prolonged confrontation can also increase the geopolitical risk premium that the United States is trying to contain.

The central question, therefore, is no longer simply how much oil is passing through the Strait of Hormuz. It is how long the global market can function without knowing the answer.

If that uncertainty persists, the oil market could continue carrying a substantial security premium even if physical supplies prove higher than current estimates suggest. The longer the uncertainty lasts, the more deeply it can become embedded in prices, inflation expectations and global economic planning.

With information from Reuters.

The Eastern Economic Forum (EEF) has been described as a successful solid platform since its creation. It increasingly attracts guests from widely different countries, especially leaders of China, India, Malaysia, Mongolia, and Myanmar. The leaders of Vietnam, Kazakhstan, Laos, and Thailand have visited it in various capacities. The business segment of the forum has long gone far beyond the geographical boundaries of Eurasia. Its frequent unprecedented large number of guests includes businesspeople from South America, Africa, and the Middle East. That, however, it remains open for entrepreneurial contacts with everyone whose natural interests are primarily in the trade, economic, and social spheres. This cross-platform cooperation between the structures is developing, growing deeper and creating a new agenda. The most essential feature is that the platform is guided by the principles of equality, mutual benefit, and honest dialogue, which are entirely different from those of Western-oriented structures. 

The EEF, which opened on 1st-4th September, in Russia’s Far Eastern city of Vladivostok, has become a solid platform for open and constructive dialogue among business leaders, government officials, and members of the expert community. It has also become a unique venue for discussing the strategic development of the Russian Far East and the country as a whole, while fostering and strengthening potential partnerships with counterparts, particularly from the Asia-Pacific region, in food production, infrastructure, logistics, industry, energy, and many other sectors of the economy. While recognizing the huge untapped economic potential of the region, it is also understandable that the development of the Far East largely depends on human capital, entrepreneurial efforts, and the ability of regions to create the necessary conditions for realizing the practical expectations.

On 2nd September, as part of the business program, the “Towards a Common Future: Inclusion as a Development Resource for the Far East” discussion was held with a strong focus on how to create an equal opportunity environment, develop human capital, and engage diverse groups in economic and social life. The following day, the majority of the participants in the “Inspiring Investments: A Development Strategy for Growth and Scaling” session touched on funding mechanisms for creative projects, opportunities to enter foreign markets, and collaboration between businesses, investors, development institutions, and government agencies. The key point focused on the development of the creative economy and international cooperation with Asia-Pacific countries, industry investments, the export of intellectual property and creative products, the media’s role in the development and positioning of regions in the Far East, new content formats, and training personnel for the economy of the future.

As part of the discussions at the forum, Russia and the United States continued their business dialogue, headed by Robert Agee, president and CEO of the American Chamber of Commerce in Russia (AmCham Russia), and with the participation of US representatives. It was spearheaded by the Roscongress Foundation in Russia.  Anton Kobyakov, Adviser to the President of the Russian Federation, noted, however, that there is a strong appetite on both sides for direct professional engagement. What matters most is to sustain the momentum and possibly broaden the agenda to include bilateral entrepreneurial partnership. 

“There is the need to facilitate more networking to identify specific strategic areas for cooperation,” said Robert Agee, president and CEO of the American Chamber of Commerce in Russia, and unreservedly agreed to continue their work on developing business ties and prepare for the participation of American representatives in the Russian Federation.

With many Asian and Pacific participants, explored opportunities for developing small and medium-sized enterprises. This is becoming increasingly important amid structural changes in the economy, as businesses look for new avenues for growth. The EEF made it possible not only to exchange experience but also to find concrete solutions that will help entrepreneurs adapt to changing conditions and unlock new opportunities for growth.

Developing trade, strengthening of interstate ties, and the creation of a common space for interaction among Asia-Pacific countries have assumed a new trend with Russia. The argument was logically based on Russia’s historical experience of cooperation with East Asian countries. It was further underlined that Russia and the Asia-Pacific attract politicians and entrepreneurs from around the world. In these current geopolitical circumstances, Russia needs to seek out new opportunities for development, particularly from the Asia-Pacific region, and with reference to the emerging new multipolar world. At the heart of the forum program was the search for new sources of growth and resilience for SMEs amid structural changes in the economy, from raising productivity and adopting new technologies to managing risks and adapting business models. One section of the program focused on the role of automation and artificial intelligence, changes in business processes, employees’ readiness to work with new technologies, and ways of improving productivity. 

In addition to the above, a special session was devoted to analysis where experts outlined the key economic trends across the Asia-Pacific region. As monitored, this session was set out in the analytical review entitled “Asia Trends 2026: The AI Boom, Industrial Relocation, and Geopolitical Fragmentation,” prepared ahead of the opening of the Eastern Economic Forum on 1st September. The review clearly noted, among other things, that Asia accounts for around 60% of global GDP growth and is becoming the world’s new center of trade, industry, technology, finance, and military power. Within the region, however, economic growth is highly uneven, while technology and capital are concentrated in a small group of states, making consolidation difficult. The ASEAN countries, meanwhile, face competition from Chinese manufacturers while also coming under growing geopolitical pressure from Washington. More broadly, the Asia-Pacific region is more exposed than any other to the effects of the energy crisis and to climate risks such as a super El Niño. 

According to the International Monetary Fund, Asian GDP grew by 5% in 2025, significantly ahead of global growth of 3.5%. Within the region, however, countries face a range of specific challenges, from high labor costs and insufficient industrial capacity to balance-of-payments difficulties and currency instability. These factors are driving increasingly divergent development paths among Asian economies. The region’s advanced economies, such as Japan and South Korea, posted lower growth rates, at 1.2% and 1%, respectively, in 2025. Asia’s emerging economies grew by 5.5% overall over the same period, with performance ranging from a 2% contraction in GDP in Myanmar to an 8% surge in Vietnam. 

Countries with the strongest growth prospects are attracting investment, leaving others with fewer opportunities to draw in capital. According to the United Nations Conference on Trade and Development, developing countries in Asia attracted US$644 billion in foreign direct investment in 2025. That is around 40% of the global total and more than 70% of all investment in developing countries. Capital flows are unevenly distributed: eight of the ten largest recipients of foreign direct investment among developing countries are in Asia, and together they account for around 60% of all inflows to developing economies and more than 80% of inflows to the region. 

Capital is becoming increasingly concentrated not only in a small number of countries but also in a narrow range of sectors, particularly artificial intelligence, clean energy, semiconductors, and critical minerals. In the longer term, this could deepen inequality and worsen the position of countries without a strong presence in these fields. Asia is one of the principal beneficiaries of the global AI boom. The investment cycle associated with its development has driven up demand for semiconductors, memory, servers, network equipment, and related electronics. The region occupies a central position in the global supply chain for these products. Technology exports will remain a powerful engine of economic growth in Asia, although the benefits will be distributed unevenly depending on each country’s position in the value chain.

South-East Asia’s role as an industrial center is growing as production capacity relocates there from China, which is no longer a low-cost manufacturing base. Chinese companies have begun redirecting production to Vietnam and Indonesia in particular in order to mitigate the impact of US tariffs. At the same time, China has increased its exports of industrial components and capital goods, supplying the equipment and parts needed by manufacturing centers in other countries. Exports of intermediate goods, including memory chips, other semiconductors, and industrial components, rose by 9% in 2025. Part of this represented an indirect offset to reduced shipments to the United States, as components, particularly in electronics, were used by manufacturers in other countries to produce goods that were subsequently exported to the US. A fall of roughly US$15 billion in smartphone exports, for example, was matched by a comparable increase in shipments of components, notably to India. 

In many other cases, however, the growth in exports of components and equipment was not linked to replacing sales China had lost in the US. Instead, it supported the expansion of production in third markets, especially developing ones, reinforcing China’s role as a supplier of production inputs rather than an exporter of finished goods. The result is an integrated supply chain taking shape across the region, encompassing research and development and the manufacture of high-technology components in China, assembly and packaging in an ASEAN country such as Malaysia or Vietnam, and the subsequent shipment of products to markets within the region and beyond. 

Amid the fragmentation of the global economy and trade, the development of the Eurasian space calls for resilient regional supply chains and logistical connectivity between states. Russia’s Far Eastern Federal District can play a strategically important role here. Thanks to its location, the district can serve as a resource and logistics gateway within the transport corridors linking European Russia with Asia. For a long time, infrastructure constraints held back the expansion of ties between Russia and Asian states, but the situation has begun to change with the development of the Eastern Operating Domain, which comprises the Baikal–Amur Mainline and the Trans-Siberian Railway. 

A program to modernize the Eastern Operating Domain has been under way since 2013, aimed at eliminating bottlenecks on the railways of Siberia and the Far East. Over that period, its carrying capacity has increased by 84%, reaching 180 million tonnes in 2025. The modernization is expected to raise that figure to 210 million tonnes by the end of 2030 and 270 million tonnes by the end of 2032. The development of the rail network and port infrastructure will largely determine the prospects for Eurasia and for the Asia-Pacific region in particular, as the world’s economic, financial, and trade center shifts towards the region. 

Emerging trends are reshaping the world; South-South economic partnership is seemingly becoming both the political and economic architecture. Logically, developing collaboration with Asian partners, anchoring discussions on technological leadership, and making breakthroughs in scientific fields and adopting innovative technologies are increasingly reshaping the world. Today, the role of academic institutions is to build a solid scientific and technological foundation that addresses applied industrial challenges while enhancing business efficiency, eco-friendliness, and sustainability. It is only through this synergy between science and the real economic sectors that can bring true multifaceted sovereignty. In conclusion, Asia-Pacific and Russia have to create a new model of economic and business and trade relations in the Global South.

As monitored from official reports, Russia is creating practically a new model of development of the Far East with maximally comfortable conditions for enterprises, as well as legal innovations for the investment climate in the region. Therefore, potential Asia-Pacific investors have to work on new ideas and new strategies for developing trade, agro-processing, industry, and other economic sectors in the Far Eastern region. The Eastern Economic Forum was held from September 1 to 4 on the campus of the Far Eastern Federal University. This year’s theme: “The Far East: Development for the Benefit of People.” It was the 11th EEF and organized by the Roscongress Foundation.

China is buying ninety percent of Iran’s oil exports, settling transactions in renminbi, and hiding the rest beneath layers of shell companies. This is not defiance. It is a demonstration, conducted in plain sight, of exactly how far American economic reach actually extends.

Scott Bessent promised, when he launched Operation Economic Outcast last week, that no one would be above the reach of US sanctions. China’s foreign ministry responded by saying Beijing would do everything necessary to safeguard its own rights and interests. That exchange, watched by the rest of the world, is not really about Iran. It is about whether the threat of American secondary sanctions can force a country that has already fought several trade wars with Washington to a standstill into changing its economic behaviour. The answer, which China has been demonstrating methodically for months, is no.

How China Made Itself Immune to US Secondary Sanctions

The architecture of Chinese-Iranian trade has been specifically designed to sit outside dollar-system jurisdiction. Chinese banks and companies that buy Iranian oil settle transactions in renminbi or through barter arrangements, making them effectively immune to American extraterritorial authority. The handful of Chinese entities that still touch dollar-denominated transactions do so through shell companies that can be discarded and replaced faster than Washington can identify and sanction them. The result is the regulatory whack-a-mole problem that American Treasury officials privately acknowledge, eliminate one entity, and three more appear in its place, each more obscured than the last.

Washington could escalate by sanctioning major Chinese banks and companies that have no Iran ties at all, using them as leverage to pressure Beijing to rein in those that do. That option exists on paper. In practice, it would constitute a declaration of economic war against China’s financial system at a moment when the US economy is already strained by six months of conflict with Iran, oil prices are elevated, and midterm elections are eight weeks away. The Trump administration knows this, which is why Bessent’s ultimatum came with no major Chinese institution on the sanctions list. The threat was real. The enforcement mechanism was not.

What a US Victory in Iran Would Cost Beijing

China sources roughly forty percent of its oil imports from the Gulf, with Iran accounting for ten percent of that total. If the US wins this war convincingly, meaning Iran’s government collapses or capitulates and Washington reinstalls itself as the dominant security guarantor across the Gulf, the energy architecture that China has spent two decades building becomes dependent on American goodwill. Every barrel of Gulf oil that China buys would effectively pass through a security framework Washington controls.

The regional knock-on effects compound that problem. The Mecca pact between Saudi Arabia, Turkey and Pakistan, the SCO’s deepening trade and financial architecture, the China-brokered Saudi-Iran normalisation of 2023: all of these represent years of Chinese diplomatic investment in a Middle East that is gradually reducing its security dependence on the United States. An Iranian defeat that pushes regional states back under the American umbrella undoes that investment at a stroke. From Beijing’s perspective, the cost of buying Iranian oil at a discount and absorbing American secondary sanctions is considerably lower than the cost of losing the regional influence that Iran’s survival helps sustain.

Neither Ally Nor Bystander

The SCO summit in Bishkek last week illustrated Beijing’s position with more precision than any official statement. Xi met Putin and Modi bilaterally. Iran’s President Pezeshkian attended the summit and held consultations at foreign minister level. He was not invited to Beijing. He did not get a Xi bilateral. That calibrated distance is deliberate, and it reflects a Chinese calculation that is more sophisticated than either alliance or abandonment.

Beijing does not want Iran to lose. It also does not want Iran to win so completely that Tehran’s regional hegemony destabilises the Gulf relationships China has been cultivating. The Chinese position, buying Iranian oil, refusing to arm Iran, keeping diplomatic engagement at arm’s length, is designed to keep Iran functional without making China responsible for Iranian behaviour. It is the foreign policy equivalent of keeping a fire burning without touching it.

Xi’s scheduled visit to Washington later this month, coming directly after the Bishkek summit, reinforces this reading. Beijing is simultaneously demonstrating to Iran that it has economic backing and demonstrating to Washington that it has strategic restraint. Both demonstrations serve Chinese interests. Neither requires China to choose a side.

Five Things Worth Watching

• Whether Xi’s Washington visit produces any concrete understanding on Iran-related secondary sanctions. If the two sides agree on a framework that gives China cover to quietly reduce Iranian oil purchases over time, the sanctions architecture gains traction it currently lacks. If the summit produces only standard language about constructive competition, Operation Economic Outcast’s China problem remains unresolved.
• The SCO Development Bank’s progress toward implementation. If the bank moves from agreement to operational institution in the coming months, it creates dollar-independent financing infrastructure that makes secondary sanctions significantly less effective not just for China-Iran trade but for the broader Eurasian trade network the SCO is building.
• Whether any Chinese entity on the August sanctions list is large enough that its designation produces real disruption rather than being absorbed and routed around. The signal from August’s first wave was that Washington sanctioned deliberately small targets. The size and visibility of the next wave’s targets will tell you how seriously Washington is willing to press China.
• India’s position on renminbi settlement for its own Iranian oil purchases. If Delhi follows Beijing’s approach and expands non-dollar settlement for energy trade, the secondary sanctions architecture faces a second major exemption that Washington is even less able to address given how carefully it has been courting India.
• Iran’s currency trajectory. The rial has hit record lows despite Chinese oil purchases continuing. If the currency continues to deteriorate even with Chinese demand stable, it suggests Operation Economic Outcast is landing on Iran’s non-oil economy in ways that the Chinese lifeline cannot fully offset which changes the pressure calculus regardless of whether Beijing complies.

The Bottom Line

Washington designed Operation Economic Outcast to isolate Iran. What it has demonstrated is the outer boundary of American economic jurisdiction in a world where China has spent a decade building the infrastructure to sit outside it. Renminbi settlement, dark fleet shipping, teapot refineries, shell company networks, these are not improvised workarounds. They are a parallel financial architecture, constructed precisely for this contingency, and it works well enough to keep Iranian oil flowing at volumes Washington cannot stop.

The deeper problem for the Trump administration is not that China is defying its sanctions. It is that China is proving, transaction by transaction, that the sanctions cannot be enforced against a country of sufficient size and sufficient preparation. That demonstration has an audience well beyond Beijing and Tehran. Every country currently watching whether to comply with American secondary sanctions is learning the same lesson: the reach of US economic power has a ceiling, and China has found it.