How will the resumption of diplomatic relations between Iran and Saudi Arabia affect the global economy and energy?
Writer： Hengfeng you electric Time：2023-03-17 views：times
On March 10, 2023, as the world's major oil producers, Iran and Saudi Arabia, under the mediation of the Chinese government, finally reached a consensus and formally resumed the establishment of diplomatic relations. The tension between the two sides has always been an important risk factor in the global energy market. What positive impact will Iran and Saudi Arabia have on the world economy and energy market when they shake hands? Hengfengyou Electric MARTIN believes that it specifically includes the following points:
1. Stabilize global oil and energy prices. Tensions between Iran and Saudi Arabia often lead to fluctuations in oil prices. If the two countries can reach a settlement, it will stabilize the oil market and reduce the risk of oil price fluctuations. If the two countries re-establish diplomatic relations, this will reduce regional tension and may help to alleviate oil price fluctuations. In the short term, this may lead to a decline in oil prices. However, this may also lead to an increase in production and an oversupply situation, which may gradually depress prices.
2. The reconciliation between Saudi Arabia and Iran almost announced the death of "petrodollars", accelerated the internationalization of the RMB, and greatly enhanced China's political influence as a responsible global power.
Many people may not know when the "petrodollar" was established? It was in 1979 that the United States reached an agreement with the Gulf oil countries, which used the United States dollar to settle accounts., In order to improve the current bad diplomatic situation, Iran may privately promise to the Sunni countries in the Middle East not to export the Shiite revolution. As a result, one of the two pillars is missing, and the two pillars of the United States strategy in the Middle East "one whip (Israel) and one target (Iran)". How far can petrodollars go because of the fall of one of the two pillars of the Shah reconciliation? So the internationalization of China's RMB has reached a new level.
3. To stabilize the situation in the Middle East and improve China's influence in the Middle East. The differences between Iran and Saudi Arabia have always been a major contradiction in the Middle East. If the two countries can reconcile, it will help to ease the tension in the Middle East, promote regional peace and stability, and promote economic and trade exchanges in the Middle East. This is also the victory of China's peaceful diplomacy, which shows that China's global security initiative has been highly recognized and substantively responded by the countries in the Middle East. China has long pointed out that promoting regional security and development is the two keys to solving the Middle East problem, which shows that China's solution to the Middle East problem has both strategic foresight, policy pragmatism and flexibility, which is of far-reaching significance for building a new geopolitical and long-term stability in the Middle East.
4. Promote the development of power transmission and distribution industry. The reconciliation between Iran and Saudi Arabia will help strengthen the cooperation between the two countries in energy, promote the development of the transmission and distribution industry, and strengthen regional energy connectivity. Hengfengyou Electric Group is engaged in the manufacturing of distribution transformers, distribution boxes, transmission towers, cables and other transmission and distribution products, and has been successfully sold to Iraq, Kuwait, the United Arab Emirates, Oman, Qatar and other Middle East countries in 2018. Hengfengyou Electric MARTIN believes that the establishment of diplomatic relations between the two countries will inevitably increase the demand for transmission towers, cables and new energy equipment, because Iran's electricity bill is really too cheap, which is only a few cents in RMB. If the interconnection of the power grid in the Middle East is realized, Iran's cheap electricity will be exported to more countries and regions in the Middle East, which will greatly promote Iran's economy, so it is a major benefit for global power transmission and distribution.
5. For the new energy industry, Iran and Saudi Arabia are not leaders in new energy development. The re-establishment of diplomatic relations between the two countries may hit the investment and development of the industry. If these two countries continue to rely on the development of the oil industry, this will slow the global shift to renewable energy. However, if these two countries decide to invest in the new energy industry, it may also bring huge opportunities for the industry. Hengfengyou Electric MARTIN believes that the globalization of new energy in the world will inevitably lead the two countries to turn to new energy construction. After all, oil exploitation will end one day, so the development of new energy will also be good.
In short, Iran and Saudi Arabia will shake hands and make peace, which will help strengthen regional peace and stability, promote regional economic development, and have a positive impact on the world economy and energy market.
