Japan Ditches Pact With U.S. to Purchase Cheap Russian Oil
The historic arraignment of former President Donald Trump may be dominating the news this week, but there are international events with significant future impacts on the U.S. that are going largely unreported. One such event is Japan’s decision to purchase Russian crude oil, breaking the pact with the U.S. to cap Russian crude purchases at $60 per barrel.
Japan, the only member of the G-7 to increase its rate of Russian natural gas purchases in the last year, received permission to purchase Russian oil at just below $70 per barrel, citing economic and energy needs. Its actions highlight why Japan was the most tentative to voice overwhelming support for Ukraine and condemnation of Russia, despite voicing support for Ukraine.
Although Russia accounts for only about one-tenth of Japan’s imports and Japan can manage without buying Russian crude oil, it still chose to do so, unlike some of its European counterparts. This decision can have repercussions on the global chess board and impact gas prices worldwide.
Cancel Your Summer Plans
Saudi Arabia’s announcement of plans to cut oil production surprised the world, and experts predict that gas prices at the pump will increase between five and 15 cents per gallon in the next two weeks. We can expect summer gas to cost around $4 per gallon range. The reduction in oil production by OPEC raises the price of gasoline, and this is inconvenient for consumers who will have to pay more at the pump.
The Dragon Behind the Curtain
China has been making big moves on the international front while the West snoozes under the comfort of assumed dominance. Chinese President Xi Jinping has been spreading ‘goodwill’ worldwide, brokering peace between unlikely countries and clinching deals for energy production. Recently, China agreed to ditch the U.S. Dollar as an intermediary currency for trade and financial transactions, instead using the yuan. China has made this agreement with several influential countries, such as Russia, Brazil, India, Pakistan, Uzbekistan, Kazakhstan, Tajikistan, and Kyrgyzstan, via its Shanghai Cooperation Organization (SCO). Toppling the dollar could take decades, but to China, that is a challenge they can weather with ease.
If I Had A Dollar…
China’s long game plan for its currency, yuan, can devalue what the U.S. values most, the greenback. China, Russia, and Saudi Arabia have all cozied up as a tricky little trio of mischief, making it crucial for the U.S. to up its game regarding foreign policy to stay ahead. Japan’s decision to break the pact with the U.S. on Russian crude oil purchases may appear insignificant on its own, but it could signify a much significant future impact for the United States.
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