Welcome to The Geopolity’s What We’re Watching (3W), our our daily look at the interconnected worlds of Geopolitics, Economics and Energy. Curated from the world’s leading sources of information, our analysis and commentary is designed to help you make sense of the events driving the major developments in the world.
In this roundup, we take a closer look at:
- The continued breaches by the US – Israel Alliance of the Gaza ceasefire conditions
- The US political manoeuvre to force the Lebanese army to disarm Hezbollah
- The US pressure on Ukraine to accept the current peace proposal; where 3W explains why Europe and Ukraine are making a strategic blunder when it comes to this proposal
- The US seizure of a Venezuelan VLCC
- The continued fighting along the Thailand – Cambodia border
- Mexico’s decision to impose tariffs on Chinese good; which 3W notes is forced regionalization of the global economy in effect
- The 0.25% rate cut by the US Federal Reserve
- The failure of the US to end India’s purchases of Russian crude oil
- The view that there will be a massive supply glut in the oil market of 2026, even if China continues its massive stock building
- The second major change in policy on the export of Nvidia’s AI chips to China by the Trump administration
Geopolitics
As to Gaza, in our most recent update, 3W noted that the Gaza Peace Plan is developing along the lines of the Lebanon Peace Plan, and we warned that this means peace is not the objective, but complete subjugation of the Palestinian people. With this in mind, 3W notes Hamas was correct when yesterday it called upon the international community to increase its pressure on Israel to force it to finally live up to what it has agreed to, i.e. an end to its almost daily strikes on Gaza, a withdrawal of its forces to the agreed positions, and free entry of aid into Gaza. The Associated Press writes that Israeli airstrikes and shootings in Gaza have killed at least 376 Palestinians since the ceasefire took hold; and that under the ceasefire deal, the number of trucks of supplies was supposed to ramp up to at least 600 a day, but the UN has recorded an average of just 120 trucks of aid entering Gaza, as a result of which most Gazans remain in a state of hunger while medical supplies have “not increased in any meaningful way” with hospitals still facing severe shortages of essential drugs and supplies.
As Lebanon, a new US defence bill proposes to make support for the Lebanese army conditional on progress in disarming Hezbollah, writes The National. According to the final text of this year’s National Defence Authorisation Act released by US legislators this week, Washington’s military assistance to Lebanon is envisaged to be used to support the disarmament of Hezbollah. The bill states that the Secretary of Defence and the head of US Central Command must submit a report by June 30, 2026 on plans to continue financial and material aid, to include a “rubric for assessing the progress of the Lebanese Armed Forces in disarming Hezbollah, and options for suspending assistance to the LAF if it is determined that such forces are unwilling to act to disarm Hezbollah”. 3W notes this is further evidence the so-called ceasefire agreement is designed to further the objectives of the US – Israel Alliance, not to security any of rights or interests of the people of Lebanon. It is about leaving Lebanon weak and exposed to Israel’s military might, unable to resist any of it demands. In Lebanon the Lebanese army is to lead the work to “neuter” the resistance groups opposing this Alliance ambition. In Gaza the job is to be done by the international security force of Muslim and Arab armies.
As to Ukraine, Ukrainian president Volodymyr Zelenskyy has reaffirmed his strong refusal to cede any territory, writes The Associated Press. 3W notes that Zelenskyy’s comment came after he toured Europe to meet with European political leaders. They undoubtedly “advised” him to take this stance, and in our view he failed to realize that Europe has no cards to play. They literally have nothing to support Ukraine with. No more weapons. No armies. No money. Only moral rhetoric. The reality is, Russia and the US hold all the cards. Russia, because it is relentlessly griding away at the Ukrainian forces on the frontline, focusing less on territorial gains and more on destroying in a methodological manner all the weapons Ukraine’s supporters have donated it, waiting for the moment the Ukraine defenses implode. The US because it is the only western nation with the ability to really prop up Ukrainian defenses. This means that the Ukraine War will end on the terms of Russia and the US, not on the terms of Europe and Ukraine. And this will leave Europe’s and Ukraine’s current political elite embarrassed (and exposed).
As to the US position on Ukraine, The Associated Press writes that in an interview with Politico US president Trump repeated his call for Ukraine to accept the current US – Russia agreed peace plan. Other Ukrainian officials, including Zelenskyy’s “lieutenants, his top people”, agree with him, Trump said. He therefore reiterated his call for Ukraine to hold presidential elections – in the 3W view in order to give Zelenskyy a gracious exit and to make room for another group of political leaders who will execute the US – Russia agreed peace plan.
On Wednesday US president Trump then held a call with the leaders of France, the UK and Germany, after they had met Zelenskyy, to discuss efforts the Ukraine peace deal, writes Axios. “We discussed Ukraine in pretty strong words. We will see what happens,” Trump said afterward, according to a separate Axios report. Trump said the Europeans proposed a meeting with him and Zelensky over the weekend somewhere in Europe. “We will see,” he said. “We don’t want to waste our time.” 3W notes that in our view these Trump comments indicate he too doesn’t really care much what the Europeans think or want.
As to broader US – European relations, US president Trump denounced Europe as a “decaying” group of nations led by “weak” people in an interview with Politico. “I think they’re weak,” Trump said of Europe’s political leaders. “But I also think that they want to be so politically correct.” He added, “I think they don’t know what to do. Europe doesn’t know what to do.” Trump also promised to offer support to European politicians that share his worldview.
As to Venezuela, the US has moved to seize an oil tanker off the coast of Venezuela, writes Reuters. The very large crude carrier (VLCC) Skipper was boarded by US military personnel on Wednesday. The Skipper left Venezuela’s main oil port of Jose between December 4 and 5 after loading some 1.8 million barrels of Venezuela’s Merey heavy crude. It transferred about 200,000 barrels near Curacao to the Panama-flagged Neptune 6 bound for Cuba before the seizure. Previously the US had imposed sanctions on the tanker for what it says was involvement in Iranian oil trading when the vessel was called the Adisa.
3W notes that after creating fear in Venezuela through amassing troops and attacking speedboats of its coast, this latest US move appears designed to create an economic problem for the Venezuelan government as the threat of seizure will make it much harder for the country to find buyers for its oil. Reuters writes that on Wednesday, more than 80 vessels loaded or waiting to load oil were in Venezuelan waters or near its coast, including more than 30 under US sanctions. All these are now under threat of seizure and therefore unlikely to move, for the time being. Oil buyers have responded by demanding steep discounts on Venezuelan oil in order to incentivize them to take the risks associated with buying it, Reuters also writes.
As to the Thailand – Cambodia tensions, earlier this week 3W noted that fighting had resumed along the border of the two countries. This fighting showed no signs of abating Wednesday, writes The Associated Press. Over a dozen people have been killed in the latest fighting and about 400,000 people have been evacuated on the Thai side. Cambodia has evacuated more than 127,000 villagers, its defense ministry said. Trump late Tuesday said he would use his sway to end the renewed fighting. “Tomorrow I’ll have to make a phone call,” Trump said.
Nikkei Asia writes that the current round of fighting had been coming for a few weeks already. Thailand last month suspended implementation of the ceasefire deal organized by the US over the month of October, claiming Cambodia was laying new landmines in disputed territory. But, NA adds, this move came as new Thai Prime Minister Anutin Charnvirakul, who replaced Paetongtarn Shinawatra who was suspended by the Thai Constitutional Court in August over her relationship with Cambodia, was weathering mounting domestic criticism over his government’s response to floods that devastated southern provinces and its slowness to crack down on high-profile figures linked to the multi-billion dollar scam industry and money laundering. When 3W looked at how the US uses war to further its geopolitical interests, we already noted that the internal Thai power struggle has to do with US – China relations, and that the Thailand – Cambodia relation is similarly being driven by this competition by the world’s two greatest powers. Unsurprisingly, therefore, China is also pushing to play a mediating role in the conflict, writes Nikkei Asia. China appealed for restraint by both countries on Tuesday and to “meet each other halfway”. Thailand rebuked the Chinese call for calm. At 3W we expect, however, that Thailand will not push back against US president Trump’s push for “peace”.
Macroeconomics
Mexico’s Senate approved on Wednesday tariff hikes of up to 50% on imports from China and several Asian countries starting next year, writes Reuters. Irrespective of what might officially be said about this move, in our 3W view it is clearly linked to the Trump Trade War. Trump threatened sanctions on Mexico to force it to break its trade relation with China. This Mexico is now clearly doing, as indicated by this move. The reason several Asian countries are included is to close a backdoor for Chinese goods into Mexico. In other words, this is the forced regionalization of the global economy in effect.
The Federal Reserve on Wednesday reduced its key interest rate by a quarter-point, writes The Associated Press, which nots this is the third such reduction in a row. The cut decreased the Fed’s rate to about 3.6%, the lowest it has been in nearly three years. US president Trump criticized the cut as too small, and said he would have preferred “at least double.”
Energy
India’s crude oil imports from Russia are on track to climb to a six-month high in December, writes Reuters. Crude arrivals from Russia are expected to rise to 1.85 million barrels per day (bpd) in December, from 1.83 million bpd in November. This data indicates that India’s appetite for Russian crude has not been diminished by the US sanctions against top Russian producers Lukoil and Rosneft. What has changed is the mix of India’s buyers. The largest chunk of Russian oil being imported by India in December is being offloaded at Vadinar port, which serves the refinery owned by Nayara Energy, in which Rosneft owns a 49.13% stake. Nayara is storing a significant part of its crude purchases, in the hope that the sanctions against Russian oil and refined products will be eased, or that enough buyers will be prepared to ignore them. Meanwhile, India’s major privately-owned refiner Reliance Industries announced it stopped using Russian oil at its export refinery in the country. It is on track to import about 293,000 bpd from Russia in December through its port at Sikka on India’s west coast. This is down from 552,000 bpd in November and is well below the 826,000 bpd in June. While Nayara increased its purchases and Reliance reduced them, India’s state-owned companies continue to buy at previous levels, accounting for about 904,000 bpd of imports from Russia in December. The conclusion that can be drawn from this data, 3W notes, is that the US has failed to force India to end its Russian crude oil imports.
Trafigura believes the oil market faces a “super glut” next year as a burst of new supply collides with weakness in the global economy, writes The Financial Times. Saad Rahim, chief economist of Trafigura, said on Tuesday that new drilling projects and slowing demand growth were likely to weigh further on already depressed crude prices next year. “Whether it’s a glut, or a super glut, it’s hard to get away from that,” Rahim said in remarks alongside the company’s annual results. “China needs to keep buying at this rate, for that super glut to not show up even earlier,” Rahim added.
The signs are that China’s stockpiling of crude is expected to continue next year, writes Bloomberg. Energy Aspects estimates the nation’s overall storage capacity — including commercial — is around 2 billion barrels, and is expected to expand by nearly 260 million barrels next year. Connected to that, Energy Aspects currently expects inbound shipments of about 11.4 million barrels a day, roughly flat year-on-year. Citigroup forecasts China’s stockpiling could continue at a rate of about 900,000 barrels a day next year, up from daily average builds since March of around 800,000 barrels. FGE predicts the country may add 600,000 barrels a day, compared with 480,000 barrels a day in 2025.
Technology
For a second time the Trump administration has made a major change in policy on the export of Nvidia’s AI chips to China, writes Nikkei Asia. In April, it banned shipments to China of the H20 chip but reversed the decision in July. The H20 is a downgraded version of Nvidia’s H100 chip, tailored for the Chinese market. Now, Trump said in a social media post on Monday that the US government will allow the AI titan to sell its “Hopper 200 (H200)” chips to China, in exchange for 25% of the sales. “I have informed President Xi [Jinping], of China, that the United States will allow NVIDIA to ship its H200 products to approved customers in China, and other Countries, under conditions that allow for continued strong National Security,” Trump said in a post on Monday. Analysts and industry executives consider the H200 to be a very advanced GPU capable of handling high-performance computing workloads, and it only just became available last year. It is also Nvidia’s first GPU card to feature HBM3e, an advanced grade of high-bandwidth memory specifically designed for AI computing. HBM chips are crucial for building competitive AI computing chips, because they provide more data-transfer channels and enable lower latency, both of which significantly improve computing efficiency when handling AI workloads. By granting China access to H200 products that include HBM, the latest reversal of U.S. government policy in effect restores China’s access to the advanced memory chips. Nikkei Asia notes that after the previous US government U-turn in July, the Chinese government and major think tanks alleged there were security risks with the NVIDIA chips. The response by Chinese industry to this latest US policy adjustment will therefore depend on the stance taken by the Chinese government. Because the China’s homegrown solutions, including Huawei’s Ascend AI chips and Cambricon Technologies’ offerings are becoming more capable of competing with Nvidia, there might less of an impact on NVIDIA total sales than expected.