With the opening of a new oil pipeline from the worlds number one oil exporter, Russia, to the number one oil consumer, China, signals a number of worrying trends.
The fact that Russia overtook Saudia Aradia in 2009 marks the recognition that production there has probably peaked and is now in decline. Saudi was long known as the “swing producer” picking up the slack as one by one, other oil producing fields went into decline.
Secondly, the flow of oil to China means that Western Europe will be in competition with the worlds new economic powerhouse. As oil prices continue to rise can Europe afford a bidding war with China?
Lastly, we’ve already seen how the Russians can behave when, in 2009 they simply turned off gas supplies to the Ukraine because of “payment disputes”.