A recent report by UBS indicates a significant uptick in energy-related trade between China and West Asia following the landmark Iran-Saudi peace deal brokered by Beijing in March 2023. This deal is anticipated to substantially boost the combined trade value of both regions by 11 percent in 2030, with renewables and petrochemicals emerging as major contributors to this surge.
The agreement, facilitated by China, saw regional rivals Iran and Saudi Arabia restoring diplomatic ties after years of strained relations. This breakthrough, hailed as a diplomatic milestone, paved the way for a transformative deal set to reshape the global energy landscape.
According to UBS estimates, energy trade between China and West Asia is projected to soar by US$423 billion annually by 2030. Renewables and petrochemicals are forecasted to play pivotal roles, accounting for US$77 billion and US$325 billion, respectively.
The implications of this surge in energy trade are vast, with significant economic and market ramifications that investors may have previously underestimated. The report underscores the potential for a more trade-focused collaboration, offering immediate monetization prospects and a swift impact on share prices.
Renewables are expected to witness a boost from China’s expanding green energy footprint in the region. Meanwhile, the petrochemicals sector is poised for increased trade, buoyed by West Asia and China’s joint market dominance, which is expected to surpass that of Europe.
The growing engagement and cooperation between China and West Asia under the Belt and Road Initiative (BRI) have played a pivotal role in driving the uptick in trade between these regions.
Ken Liu, head of China and Hong Kong renewables, utilities and energy research at UBS Investment Bank was quoted as saying: “We believe the Beijing Accord of March 2023 has significant economic and market implications that investors may have overlooked.”
