It’s not just the ongoing tension over contested territories in the South China Sea that is causing headaches for China’s political opponents. On Sunday, Japan said it issued multiple protests to China over actions in the East China Sea, including what Tokyo described as the installation of radar on a Chinese offshore gas platform. Japan also said that two Chinese vessels entered Japanese territorial waters near the disputed “Senkaku” or “Diaoyu” islands in the East China Sea on Sunday morning in an escalation of tensions between the two nations, and complained that as many as 300 Chinese fishing vessels were spotted in the vicinity of the disputed islands.

Japan is concerned that the radar, reportedly like those used on patrol vessels and not on drilling rigs, could be a sign of China’s intentions to use its gas platforms in the East China Sea as military objects, the Japanese media report as cited by Reuters. As a reminder, China and Japan sparred in an aggressive, escalating tit-for-tat over territorial claims involving the Senkaku Island chain in the East China Sea back in 2013.

The installation of radar on a gas platform, if confirmed, would recall China’s actions in the South China Sea, where it has added military facilities on artificial islands according to the WSJ. Additionally, in 2013, China established an air-defense zone in the East China Sea, raising tensions with the U.S. and Japan.

Vice Foreign Minister Shinsuke Sugiyama complained to China’s Ambassador Cheng Yonghua that the incident had infringed on Japan’s sovereignty. It was Japan’s second protest to the ambassador in three days.

Furthermore, Japan’s NKK reported that about 300 Chinese vessels have been “coming and going” around the islands. Earlier, on Saturday, Japan’s foreign affairs ministry said 230 Chinese fishing vessels and six Chinese Coast Guard ships were in the area and urged them to leave. The waters surrounding the islands contained six Chinese Coast Guard ships and about 230 Chinese fishing vessels as of about 8:05 a.m. Tokyo time, Japan’s Ministry of Foreign Affairs said in an e-mailed statement Saturday. The government made the demand to the Chinese embassy in Tokyo, according to the statement.

The recent incursions by Chinese ships around the disputed islets led Japan’s vice-minister for foreign affairs, Shinsuke Sugiyama, to issue a protest Sunday. “This series of actions by the Chinese side is a one-sided escalation that significantly raises tensions at the scene, and we absolutely cannot accept it,” Mr. Sugiyama told China’s ambassador in Tokyo, according to a Japanese foreign ministry statement.

In turn, China said it was taking measures to manage the situation and “strongly” hopes that Japan treats the matter calmly and doesn’t take actions that may intensify or complicate the situation, Hua Chunying, a spokeswoman for China’s Ministry of Foreign Affairs, said in a statement posted on its website on Saturday.  “We strongly hope that the Japanese side will honor its principled agreement with us, [and] deal with the current situation with a cool head instead of taking actions that may raise tension or make things complicated,” she said in a statement on the foreign-ministry website.

While it is unclear how these territorial disputes and military escalations will culminate, Icefarm Capital’s Michael Green had an interesting take on this most recent tension, namely from the perspective of oil demand, which he said is increasingly benefitting from an “unlikely” (if highly predictable) source: China’s territorial expansion in the South, and now East, China Seas.

Japan says China has sailed a fleet of 230 vessels near Japanese-controlled waters in the East China Sea. The fleet included fishing boats and coastguard ships, Japan says, and three vessels appeared to be armed.

 

For those wondering, these vehicles are not subject to CAFE standards…

A hulking Arleigh Burke–class destroyer might typically burn a minimum of about 24 barrels (1,000 gallons) of fuel per hour,

But this figure conceals so many factors and variables that the Navy doesn’t really use it the way we use “miles per gallon.”Oct 17, 2012

That China flotilla conservatively is running the equivalent of 10,000 cars (likely closer to 30,000)… for a quiet patrol of uninhabited islands… just wait until the real naval exercises get started…good times!

To this we can only add that it is certainly the case that regional, or global, conflict will surely “benefit” oil prices, which in turn should push the S&P to even higher all time highs. What is troubling is that once upon a time suggestions such as this one that world war would be positive for commodities (or stocks) were mostly made in the realm of comedy. That this is now credible financial analysis shows just how far deep inside the rabbit hole we find ourselves.