We are leaving behind a week in which uncertainties have been lifted. In Syria, opposition forces are advancing towards Homs after Aleppo and Hama. Homs is a very important supply city for the regime. It is also of critical importance as it is 160 kilometers away from Damascus. Syrian President Bashar Assad is seeking support from his allies Russia and Iran. However, neither country is in a position to respond to this call due to their own structural problems. The capture of Homs is not only important because of its proximity to Damascus. The capture of Homs carries the risk of cutting off the Assad regime’s land connection to its strongholds on the Mediterranean coast. There is also the possibility that the Russian naval base of Tartus will be left vulnerable. Russia changed the course of the war in Assad’s favor nine years ago. However, it seems reluctant to make a similar intervention this time due to its war in Ukraine. Iran has promised limited support, but there are no signs that it will repeat the extensive aid it provided in previous years. We will continue to monitor developments in Homs and the course of the war next week.
President-elect Trump in the US gave a harsh response to the BRICS bloc’s attempt to create an alternative currency to the US dollar, which includes major world powers such as China and Russia. Trump announced that if the nine-nation bloc took such a step, he would impose a 100% customs duty on imports to the US. In a statement on Truth Social, Trump said, “The days of watching the BRICS countries try to move away from the dollar are over.” Trump sees tariffs as a tool for the growth of the US economy and the protection of the American workforce. Many of the tariffs imposed by Trump during his first term were also kept in effect by his successor Joe Biden. In the meantime, Trump has also named his candidate for the SEC seat instead of Gensler. Trump announced that he has nominated Paul Atkins to replace Gensler. Atkins, who is the CEO and founder of risk management consultancy Patomak Global Partners, served as SEC Commissioner from 2002-2008. Known for his warm stance on crypto assets, Atkins has been working on digital assets and innovation as the Co-Chair of the Chamber of Digital Commerce Token Alliance since 2017. Atkins is known for his advocacy that regulations should be designed in a way that is compatible with investors and market needs.
In France, the Michel Barnier government fell by 574 votes to 331 in a vote of confidence. While the political crisis deepened due to disagreements with the opposition in budget negotiations, Le Pen and her party, which is on the far right of the spectrum, took a stance with the leftist party New Popular Front due to cuts in social spending and inadequate increases for retirees. There was no excessive pricing on the bond side as the government was expected to fall, but analysts are concerned about further losses in France's bonds, which are seen as one of Europe's safest issuers. Macron aims to quickly resolve the crisis and form a new government. Macron will first meet with the Socialists for the prime ministerial seat.
OPEC countries led by Saudi Arabia and non-OPEC oil producers led by Russia have extended the duration of production cuts in order to stabilize production levels and ensure price stability, while drawing a roadmap for gradual production increases. In 2025-2026, OPEC members will produce a total of 39 million 725 thousand barrels per day. The group's current production cut of 2 million barrels per day will continue until December 31, 2026. The group's current cuts correspond to approximately 5.7% of global oil demand. These cuts aim to tighten supply in the markets, stabilize prices, and ensure income stability for producing countries. Chevron, the second largest oil producer in the US, announced that it will reduce capital expenditures for 2025 for the first time since the pandemic. This decision coincides with Donald Trump's inauguration with a commitment to increase energy production under the slogan "Drill, Baby, Drill." Chevron said it plans capital spending of $14.5 billion to $15.5 billion for 2025, a decrease from the $15.5 billion to $16.5 billion budget in 2024. This marks the first time Chevron has reduced spending since 2021. Similar budget cuts were seen across the industry in 2021 due to the pandemic-induced collapse in energy demand.
Trump’s harsh criticism of NATO allies for “insufficient defense spending” and his statements that he could withdraw security guarantees are bringing urgent measures for defense capacity to the agenda in Europe. Particularly due to the impact of the Ukraine war and the uncertainties in the global role of the US, EU countries are evaluating more radical financing options. The European Union is discussing the creation of a 500 billion euro common defense fund in line with the increasing security concerns with Trump’s return to the US presidency. The plan aims to provide resources from debt markets for defense projects and arms purchases. According to the Financial Times, the plan in question includes a special financing instrument that does not cover the entire EU and is supported by participating countries. This model is designed to be open to the participation of non-EU countries such as the United Kingdom and Norway. While countries such as the Netherlands, Finland and Denmark have responded positively to the proposal, it is stated that Germany’s position depends on the upcoming general elections. EU leaders emphasize that a resource of at least 500 billion euros is needed over the next decade to meet the continent’s security needs.
The ‘Eastern Route’ pipeline, which carries natural gas from Russia’s Eastern Siberia region to the northern and eastern regions of China where economic activity is intense, has begun operations. This line, which is 5,111 kilometers long, will provide 38 billion cubic meters of natural gas per year to approximately 450 million people in nine provincial regions. Russia has turned to China for energy exports due to sanctions imposed by the US and Europe after the war. China, which is trying to switch from oil to natural gas, has become Russia’s most important market. Europe is becoming dependent on the US through LNG by substituting Russian gas. Russia also aims to shift its market east.
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