8 Energy Implications of BRICS Expansion
Sanctions Push BRICS Closer, Analysts Say
Overt Operator
September 21, 2023
In a surprising move, the BRICS Alliance, which consists of Brazil, Russia, India, China, and South Africa, voted to add not just Saudi Arabia, but also five other countries to its membership during its annual summit held in South Africa.
The newly admitted countries include Argentina, Egypt, Ethiopia, the United Arab Emirates (UAE), and Iran.
This expansion has the potential for enormous geopolitical implications, yet it has received a somewhat muted reaction from Western governments and the press so far.
Here are 8 consequential energy implications of the BRICS expansion:
1. Greater share of global oil production: With the addition of these new member countries, the expanded BRICS now represents 43% of global crude oil production, according to a recent analysis published at VisualCapitalist.com. This surpasses the 38% global crude oil production controlled by OPEC, highlighting the significant geopolitical implications.
2. Higher level of economic dominance: The total GDP of the BRICS countries, including the trillion-dollar-plus GDP of Saudi Arabia, now exceeds that of the G7. Based on publicly available data, BRICS will now control a combined 29% of global GDP, according to VisualCapitalist's analysis. Energy plays a crucial role in driving this economic dominance.
3. Greater cooperation between Saudi Arabia and Russia: As major players in the OPEC+ alliance, Saudi Arabia and Russia have often clashed over official policies. The broader BRICS trading alliance provides an opportunity for increased cooperation between the two countries, potentially smoothing out conflicts within OPEC+ operations.
4. Further bifurcation in global oil markets: BRICS was already home to China and India, the world's first and third-largest crude oil importers, respectively.
With this expansion, the promotion of new and enhanced oil trading relationships between BRICS partners could contribute to the increasing division of the global oil market, which has been evident due to Russia's conflict with Ukraine.
5. Diminution of U.S. and European Middle East influence: Saudi Arabia's inclusion in the expanded BRICS raises questions about the influence of the United States and European powers in the Middle East.
As BRICS strengthens its energy partnerships, it could potentially reduce the traditional dominance of Western countries in this region.
6. Shift in energy investment patterns: With the expanded BRICS representing a significant share of global GDP and oil production, it is likely to attract increased energy investment.
This shift in investment patterns could influence global energy markets, potentially favoring BRICS member countries over traditional energy powerhouses.
7. Potential for new energy alliances: The addition of these new member countries to BRICS opens up possibilities for the formation of new energy alliances.
Increased cooperation within the expanded alliance could lead to the development of alternative energy supply chains and initiatives, challenging the existing energy dynamics.
8. Impact on global energy security: The BRICS expansion brings together countries with significant energy resources and demands.
This consolidation of energy powerhouses has the potential to shape global energy security and influence negotiations around energy-related issues.
As the BRICS Alliance expands with the inclusion of Saudi Arabia and five other countries, the energy landscape is undergoing a significant shift.
The geopolitical and economic implications of this expansion should not be underestimated, as it has the potential to reshape the energy dynamics on a global scale.