(1) “The United Arab Emirates,” today “made a shock request of [Pakistan] — repay $3.5bn immediately” [1].
(2) Saudi-Emirati relations were at an all-time low before the Iran War [2]. (Saudi Arabia just bailed Pakistan out of its Emirati loan. Saudi Arabia and Pakistan agreed a mutual-defence treaty last year [3].)
Put together, we’re seeing an Emirati-Israeli axis emerging to balance Saudi hegemony in the Gulf and Iranian hegemony over the Persian Gulf. I’d expect to see an Emirati deal with Egypt and India next if this hypothesis is correct.
What I don’t yet see is the ambition of the endgame. Is it Saudi Arabia backing off in Africa? Or is it seizing the Musandam Peninsula, islands of the Strait and possibly even territory on the other side?
Also...their central bank governor quietly asked the US Treasury for a dollar swap line...Combined with the Pakistan $3.5B recall and OPEC exit, that is three coordinated moves of a cashflow stressed country...and of course the US is being asked to extend taxpayer backed dollar credit to the same royal family that bought 49% of Trump's crypto company four days before inauguration...
UAE is in a tough spot because while they have diversified from oil, the industries they have diversified into like tourism, air travel and banking, were relying on a halo of safety that turns out to not exist.
Also, for tourism they aren't exactly welcoming to western culture. They don't even allow trans or non binary people (X) to transit to other places at dubai or abu dhabi. Can't have your cake and eat it.
I think it's not so much that they don't have liquid assets they can sell.
The issue is those liquid assets are US Treasuries and US public market equities (mag7 etc.).
They don't really want to sell them, and they also know that the US really doesn't want them to sell them - the last thing Trump wants heading into the midterms is an S&P500 bear market and 10y treasuries heading back to 5+%.
So they ask for a swap line and they're negotiating from a position of strength, the US doesn't have much of a choice but to give them as much as they need and damn the consequences
Someone's going to have to provide me with an explainer of how many different proxy forces are involved in Yemen. I can barely keep up with Lebanon and have forgotten Syria.
> an explainer of how many different proxy forces are involved in Yemen
RealLifeLore has been doing a decent job covering it [1].
The broad summary is you have the Saudi-backed unity government, the Iranian-backed Houthis, who claim all of Yemen but practically want North Yemen, and the UAE-backed STC, who also claim all of Yemen but practically want South Yemen. Emiratis bring the Israelis to the party. The Iranians bring the Russians. The Saudis bring various international elements (I know less about them than the Houthis and STC).
STC was defeated after a Saudi bombing campaign, and their independent nation quashed. While there might be holdouts here and there, they are a non-entity now.
Lots of things have existed throughout history, yet we have overcome them in the last few hundred years. There is peace in Europe (west of Russia) which had as ancient conflict as Yemen; there is democracy, freedom, women have equal rights in much of the world, starvation and many diseases are mostly overcome, warfare is very rare and not an omnipresent threat, ...
Thank goodness our predecessors didn't think this way. They thought that through reason, hard word, and humanism they could overcome these things, and they did. No doubt there were plenty of naysayers.
While I commend the positive attitude and I tend to have a positive view on the trajectory of humanity.
This part of the planet has been almost intractable since the age of Hammurabi - it is quite fractured without any current overarching unity or framework. There isn't a dominant religion (similar to Europe) or shared values. I could say almost meaningless things like "thought that through reason, hard word, and humanism they could overcome these things" which would make little of the hard truths of the long histories of the varied peoples and fractions of the area.
It would almost seem naive to say things like because we've solved some tough problems in the last century we can solve all problems.
I think you gloss over much and certainly give yourself a mightier than thou feeling with your "Thank goodness our predecessors didn't think this way".
I too hope for peaceful resolution and stability but fall back to the historic record of success especially in a place that is constantly, recently and historically decimated by war among fiefdoms.
The reason is fractured is because of the inherent tribalism within the cultures of the region. Strip away the tribalism (Oman, Qatar, UAE to an extent), concentrate the people near a few cities (Egypt), or provide them a unifying overarching culture (Iran, Turkey), and you get some success. In fact, the early Islamic empires were heavily mired in infighting even though they were "unified" under the Caliphate, in spite of the Prophet's calls for the "Ummah" (One Islamic Nation). I would even argue that Islam's biggest contribution to the region was in providing a specific administrative framework with which to shed the tribal infighting and unite culturally similar but disparate peoples together. It's also why Israel succeeded as a nation with its European flavor of nation-state identity.
An Israeli intelligence officer perhaps correctly attributed it to the past culture of water scarcity and needing to protect your water sources. That is, in the desert, there are only so many sources of water, and if someone steals it away from you, you simply die. So that created a culture of inherent suspicion of outsiders and people outside the clan, even though they all share the same customs and culture.
Defense of Israel was the primary justification offered in a recent State department memo asserting the legal basis for the war with Iran. Unusually, its publication was not announced on social media or to the press, unlike most state department official pronouncements. Anyway, rather than being opinion, this is (for the present) the official position of the United States government.
My bad, it's late in the evening here and I typed something that works when spoken with emphasis and timing (at least in my head).
I added quotes, it should say that Pakistan's weapons program is one that is outside the Nuclear Non-Proliferation Treaty as Pakistan is not a party to it.
Its a pakistani submarine, with exclusive saudi-royalty members on the bridge.
We should build a city that is a statistical bunker- basically a line, for the edge case of jihadist insurgents getting the forbidden eggs in the cake.
> Put together, we’re seeing an Emirati-Israeli axis emerging to balance Saudi hegemony in the Gulf and Iranian hegemony over the Persian Gulf. I’d expect to see an Emirati deal with Egypt and India next if this hypothesis is correct.
Don't Egypt and Israel hate each other though? Could UAE feasibly align with both?
Virtually all Arabs hate Israel but Arab governments are more varied. The modern Egyptian state is oriented toward close partnership with the US, and a large part of that was peace with Israel post '73.
Various Arab states maintain this balancing act between a virulently anti-Israel population and a US-aligned (in most cases, US-installed) regime that’s tacitly okay with the existence of Israel.
It’s actually surprising it’s achievable for so long but in the long term doesn’t feel stable given the direction things are headed
If they join a religion that isn't on the state approved list, they can't get married there and hard or extra expensive to get buried. There are some limits on religious freedom.
You might be surprised, but a civil union is the only legally binding form of marriage in many countries, e.g. Germany. The Churches - even though they are state churches - aren’t even allowed to provide a wedding ceremony if the civil union hasn’t been performed beforehand. Which different legal provisions do you think make the „religious marriage“ vs. „civil union“ morally equal to „separate but equal“?
> Being the good guys is about more than being "second worst".
If you cannot think about any group that’s not as bad as Hamas, but worse than Israel, I‘m happy to help… just ask!
They can just get married abroad. There are even online ceremonies now.
A decent number of Israeli Jews have to do that as well, since Israel recognizes Jewish marriages only under orthodox rabbis. Some Israeli Jews are not even considered Jews under strict orthodox rules.
There are 2 million muslim, mostly arab, citizens who are officially and legally equal to jews. They are distinct from the arabs in Gaza or the west bank, who are not citizens.
> The law imposes the death penalty on persons convicted of fatal terrorist attacks. In military courts, the death penalty is the "default"; only Palestinians are tried. In civilian courts, both Israelis and Palestinians are tried, but the law applies only to those who "'intentionally cause the death of a person with the aim of denying the existence of the State of Israel'—a definition designed to exclude Jewish terrorists". It therefore "effectively enshrines capital punishment for Palestinians alone".
And to preempt the "but that's Palestinians, not Israeli Arabs" bit, nope:
> In 2005, the Follow-Up Committee for Arab Education said that the Israeli government spent an average of $192 a year on Arab students compared to $1,100 for Jewish students.
> In the 2002 budget, Israel's health ministry allocated Arab communities less than 1% of its 277 m-shekel (£35m) budget (1.6 m shekels {£200,000}) to develop healthcare facilities.
They've also been cooperating on blockading Gaza for a couple of decades. Israel gets most of the attention for that, mostly rightfully so, but people seem to forget that there's a border with Egypt too and that has also had very limited access.
Egypt learned on other's mistakes for once. They saw how Jordan welcomed Palestinians on their land and they repaid the kindness by launching a coup against the government in 1970. No wonder not a single anti-Israeli coalition country is willing to deal with Palestinians directly at their own home and are keeping borders watertight :) .
As an Arab friend summed it up, 'All Arab governments like to trumpet the Palestinian cause when it serves them, but none of them are willing to lift a finger to help the Palestinians.'
This is to a large part to give Egypt plausible deniability. They don’t want to deal with Gaza, refugees, or a humanitarian crisis, but also don’t want the political fallout of taking action like the Israelis do.
The Israeli openly proposed for the Gaza Palestinians to move to Egypt (effectively ethnic cleansing Gaza, their obvious goal), not that long after 7.10.
Egypt said 'HELL NO', first, because they don't want to deal with Palestinians (both political and economic nightmare), and second because it would have been viewed as ceding to Israelis and helping them cleanse Gaza, which would be highly unpopular among their population.
More like refugees flowing out, which Egypt doesn't want to deal with.
The Palestinians didn't help their cause with Yasser Arafat's Black September uprising in Jordan. Then they topped that up with strong support for Saddam when he invaded Kuwait. Like the ones in Kuwait were literally betraying Kuwaitis to the Iraqi troops.
Oh, and did I forget Lebanon? They literally fomented the civil war.
People don't forget it. But Egypt is a dictatorship aligned with US/Israel, so there's again not much we can do there. Ending foreign aid to Egypt is probably very aligned with ending foreign aid to Israel in terms of popularity among American voters
> Ending foreign aid to Egypt is probably very aligned with ending foreign aid to Israel in terms of popularity among American voters
I strongly suspect the average American has absolutely zero sense of how much foreign aid we give Egypt. That's not to contradict your point directly, just that it isn't a very salient part of American politics (unlike Israeli foreign aid).
> it isn't a very salient part of American politics (unlike Israeli foreign aid).
I feel like Israeli aid, while vastly more salient than it used to be, is still mostly salient as a left-of-center wedge issue, otherwise being about as salient as your average major foreign policy issue - ranking just under the least salient domestic policy issue, which ranks just under the most minor personal quality of any candidate, which ranks under the current state of the economy, which ranks under the current perceived state of the economy. Wow, that's way too many times to use "salient" in one sentence.
And for the record, I'm not arguing about how much people should care, just how much they do.
It's also become a right-of-center (right of far-right?) wedge issue in the past 12 months. But I otherwise completely agree with you; I think there's a veritable chasm between how much the media talks about the US's foreign aid (both to Israel and in general) and how much it actually matters to the average voter.
If Egypt were a democracy, its government would hate Israel. That's why the current dictator overthrew the last democracy and had its elected leader die in jail, and that same dictator is now supported heavily by US funding
IMO the Pakistan aspect is overstated. This is a reversion to the norm of KSA-Pakistan relations before Imran Khan completely destroyed it by fully aligning behind Qatar and Turkiye when both were competing against KSA.
It’s complicated [1]. My low-key guess is cutting off Pakistan was intended to send a message to Cairo.
> Already aligned with the UAE
Aligning. To my understanding there isn’t a treaty yet.
> the Pakistan aspect is overstated
Pakistan isn’t the cause. It’s the canary. These moves happening in quick succession (strategically, over the last year, and tactically, in the timing of these announcements) speaks to previous assumptions being fair to be questioned.
> My low-key guess is cutting off Pakistan was intended to send a message to Cairo
Abu Dhabi and Cairo have been misaligned for years since the Sudan Civil War began (UAE backs the RSF and KSA+Egypt back the Army) as well as the UAE backing Abiy Ahmed in Ethiopia at the expense of their traditional partner KSA.
> To my understanding there isn’t a treaty yet.
This is as close as it will get. New Delhi doesn't "sign" defense treaties unless pushed to a corner, because it reduces maneuverability.
The Pakistan-KSA alignment was already cooking after IK was overthrown. I think I mentioned it before on HN (need to find the post I wrote) but given the primacy Pakistan has had in US-Iran negotiations well before the war as well the PRC's increasingly miffed attitude at Pakistan following the CPEC attacks, the US most likely brokered a back-room realignment between PK and KSA.
A neutral-to-ambivalent India with a pro-America Pakistan is better for the US than a completely aligned India with a pro-China Pakistan.
OPEC has long been Saudi Arabia reducing output, and everyone else selling everything they can. They haven't had much power since the 1970s, but that they exist means they are a threat that if everyone else actually stuck to the agreement for a change.
This is the common problem for cartels: everyone has inventive to cheat on the deals made. By selling a little more than your share you get more money, while because everyone else is following along the prices are higher. (see also prisoners dilemma)
Repeated PD is very different. The whole point of a cartel is that everyone inside is incentivized not to cheat, and it works as long as they agree on what's fair. The problem for cartels is people not in the cartel.
Tangent but: this is also why reducing greenhouse gas emissions is hard.
As long as fossil fuels remain one of the cheapest easiest to scale ways to make power, there’s a similar incentive to cheat. If everyone else cuts emissions and you don’t, your margins are higher and you can undercut them. Global reductions require an all-cooperate scenario.
Developing nations have the strongest incentive to cheat since they need those margins to catch up.
Which is why I think little progress will be made until other sources are actually cheaper. Until then it’s beyond us politically. We can’t get all nations across the world to simultaneously cooperate at that scale.
Agreed - the good news is, in many circumstances renewable energy is cheaper for new energy capacity. As long as regulations move in the right direction, we are likely to see the global energy mix move towards renewable sources over time
Not only is the renewable energy cheaper, it also raises energy independence, which turns out to be quite relevant in today's world.
Furthermore, it also reduces the drain on the (often very fragile, for thirld world countries) foreign reserves, especially relevant when the oil prices fluctuate wildly.
If your solar panels are old and you don't have money to replace them, you get slightly less electricity. If you are out of gasoline/diesel and you have no money to buy it, you have a big, big, problem.
This is exactly why I don't think it's a huge risk to be reliant on China for solar panels. If relations between your country and China go bad, it can't be that much of an emergency when they stop exporting them to you. All the panels you already bought still work!
Unless there is some hidden cybersecurity risk of them shutting off panels remotely?
Yes, exactly. The panel's control system is connected to the Internet and there's an app that an attacker could take advantage of to interfere with critical infrastructure at an inopportune time.
If you are doing grid-scale installation, surely you would want your own control system (perhaps also on your own network, separated from the general internet), precisely in order to protect the grid.
I think right now, the vast majority of oil use is not because of corrupt officials using oil energy despite the fact that cheaper energy sources are available. Maybe that problem will eventually be a sticking point in removing all carbon-emitting energy sources, but right now the barrier is mostly production capacity and the scale of capital investment required to roll out renewables at scale. But if (as seems to be the case now) rolling out renewables is more profitable than rolling out additional fossil fuel use, the capital should become increasingly available. That's why I'm optimistic, even though of course there are a lot of challenges ahead in terms of creating a truly sustainable future.
> As long as fossil fuels remain one of the cheapest easiest to scale ways to make power, there’s a similar incentive to cheat. If everyone else cuts emissions and you don’t, your margins are higher and you can undercut them. Global reductions require an all-cooperate scenario.
IMO economics always wins. You're never going to see an all-cooperate scenario.
You will see an all-compete scenario, so constantly reducing costs for alternatives is key but you also have to find a way to ensure that the producers can win economically too. This is the conundrum.
If solar panels get cheap enough to create high demand, then that demand has to carry through the process of manufacturing, installing and maintenance. Every time I read that solar has gotten even cheaper, I start calling for quotes to install them at my house and the prices are borderline obscene. Same for geothermal last time I needed to update my HVAC.
I want solar and geothermal to work but the economics are a challenge.
Keep in mind if you are in the US, your prices have been artificially raised by tariffs. 30% starting in 2018, then declining each year for a while to 15%. Those tariffs recently expired but when I searched I saw this article about new tariffs on certain countries solar as high as 123%.
All this to say, you calling a local company and getting quotes captures your price but that’s not quite the same as the global price.
Point being the US government is making them expensive for US consumers but that’s not true for global markets where they want to have energy independence. Solar is in fact very cheap these days.
In Europe you get about 1000kWh a year from 1000kW of solar panel
A plug in solar panel and microinverter at the local supermarket is about €1k/kW. 9kW of solar for €9k/£8k/$10.5k to power an average US car and an average US house.
Avearge US car does 13,000 miles a year needs about 4,500kWh, so €4500
An average US home uses 11kWh a day, or 4,000 kWh a year, that would be another €4000
US electric price is an average 17c per kWh. That's a 15% ROI.
I suspect the costs your quoting are mainly things like scaffolding and labour, and that's not going to get cheaper.
The panels themselves - ignoring inverter, install, etc, are $100 for a 400W panel [0]. To generate a whopping 16,000kWh a year -- 70% more than the average -- you'd need to spend $4k on panels. Even if panels were free, your quotes would still be obscene because tradesmen charge obscene amounts (or rather roofing work is just expensive)
> In Europe you get about 1000kWh a year from 1000kW of solar panel
Typo, 1000kWh from 1kW of solar panel.
I got my 4x 455W panels for 70€ each from BayWa (random vendor in Germany), plus delivery. Microinverter ~200€. Aluminium etc for installation ~400€ or so. I installed them together with a friend. Total cost ~900€ or so. At 30ct/kWh in Germany, break even is in 3 years. Would be earlier if I had a better roof to put them on, mine has some shadow.
So little political will is needed at this point as the economics now favor renewables. Unfortunately most of the political will seems to be leaning towards protecting the more expensive fossil fuel sources of energy.
Renewables (particularly solar) already are cheaper [1].
It's political will not economics that keeps us addicted to fossil fuels. Nobody gets rich from solar panels. You build them. They produce power. Oil wells like any mine are huge wealth concentrators. That's the real problem.
If anything, a bunch of countries (particularly those who are net oil importers) are re-evaluting their energy dependence given that the compact that the US will guarantee maritime transport has essentially been broken.
I don't know where this idea that OPEC is toothless came from but it's objectively incorrect. Counter example: OPEC was the single largest factor in the inflation shock of 2020-2022. And nobody talks about it.
In March 2020 at the start of the pandemic, it looked like the world economy would come to a standstill. Oil futures went into extreme contango, briefly going negative as nobody was taking delivery. So in April 2020 the Trump administration went and browbeat all the OPEC+ members to massively slash production [1][2][3]. Art of the deal. This culminated in a 2 year deal to cut production by initially 9.7Mbpd (million barrels per day) and then reducing over the 2 year period [4]. This was a disaster.
For context, OPEC does this sort of thing by themselves without any kind of prompting when necessary. They meet every 3 months and project demand and then set production targets to maintain a floor and ceiling for oil prices. Individual members can and do cheat, producing more than their allocation and lying about production cuts but all in all the system mostly works.
Trump loses the election. Biden comes in and demand rockets back in 2021 and crude oil prices skyrocket, as do gas prices as a result. The Biden admin quietly went to MBS to ask him to end the deal. He refused. You can overlay this 2 year deal with global inflation and it pretty much matches up exactly.
So Republicans blamed inflation on Biden even though it was a Trump deal. The Democrats didn't abandon US foreign policy and publicly hang out an ally to dry so instead just blamed greedy oil companies for price gouging. And nobody at all mentioned the 2020 OPEC deal. Not in mainstream politics anyway.
That was a 10% cut in global supply and look what it did to inflation. Closing the Strait cuts global supply by 20%. In 1973 with the Arab oil embargo, the major recessionary effects took 6 months to really hit. This is a ticking time bomb that will likely explode leading into the midterms.
This is interesting and under-reported. But it doesn't mean that oil would've spiked a lot less without the OPEC cuts, and that's not the same as gasoline costs which depend on refineries too.
Isn't the solution in game theory when there are multiple turns to just repeat the move the previous person made.
So if the other side overpumped by x1 amount then you pump an extra x1 the next turn / year (maybe multiplied some reference production factor as they don't all have the same absolute limits).
Simple game theory doesn't work in the real world. In the short term most OPEC+ members other than Saudi Arabia have very limited technical ability to significantly increase or decrease production. It's not like they have a big valve that they can open or close at will. For many oil wells, restricting flow would actually damage the geologic substrate. And drilling new wells (including all of the supporting infrastructure) can take years.
Tit for tat (start by cooperating, and for each subsequent choice do what your opponent did last turn) is the optimal for repeated 2-party prisoners' dilemma.
The real world is much more complex. OPEC is a multi-party game, for starters. For another thing, there are cascades of social/political problems that get in the way of optimal strategy at the level of nations. I.e. that only works if politicians are more interested in solving problems than controlling narratives or maintaining power. Unfortunately, an ineffective leader can be sustained by controlling the narrative, while an effective leader can be destroyed by lack of control over the narrative. And one of the best ways to control a narrative (especially if you aren't a very good leader to begin with) is to create so much chaos that it distracts from your shortcomings, and blame the chaos on enemies.
"My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, and my grandson is going to ride a camel". Sheikh Rashid bin Saeed Al Maktoum, the former Emir of Dubai.
Where is the Land Rover supposed to sit on this scale?
There are current Land Rovers with market positioning suggesting they're "better" than Mercedes, and there are historic Land Rovers which were arguably not much better than camels.
That's a quote. You may want to ask Sheikh Mohammed (current ruler of Dubai) for why his dad was mocking him for his choice of a car. I just posted the quote - felt relevant.
Their whole investment castle is built on sand (pun intended) and when oil even remotely starts to fade out as a commodity, it will crumble instantly. Panic will ensue and corruption will be rampant in order to continue the lavish consumerism. Everything will be sold for pennies. The difficult thing is not to make money once, it's to keep them afterwards.
A sovereign wealth fund with over $1 trillion USD (so with over $1 million per Emirati citizen) which invests heavily in U.S. equities will be sold for pennies?
So U.S. equities will be sold for pennies?
Are you predicting a U.S. stock market crash bigger than the Great Depression, when oil runs out?
Could be a sell off if it isn't managed...measured buy-backs scaled over a timeline that maybe offers them an opportunity to invest in other commodities may be preferable.
Actually now that I think about it...I should probably keep a pulse on ME holdings about 2 or so decades from now
Well yes, that is because they have heard the line and took it as a warning.
However just because they are trying doesn't mean they will succeed. Their attempts at diversification still seem very reliant on oil money, and its far from clear that they will eventually be able to stand on their own.
Money retrained means nothing when cheap oil is gone. Cars are only a thing because we have volumes and energy for large supply chains and scale. A rich person can afford a model-T level car, but large parts of what makes a luxury car are things that they won't be able to get at any price without modern industry that is built on distributed wealth for many people. All the electronics - needs industry. Precision manufacturing - depends on precision electronics. You can't even rebuild a current design if someone thinks to print out the blueprints.
Of course who knows how to end of oil will happen. Best case is a switch to renewables (or fission...) in which case there will be more than enough expensive oil for a few rich people to drive expensive gas cars if they want to. There are lots of other options as well, only time will tell.
(and a nod here to the replies who suggest this was never actually said)
Petromonarchies invest a lot into alternative asset classes: semiconductor industry, logistics and shipping, power electric machines, biomedical development, etc. Renewables are in the list, too.
Most of those are things that depend on cheap energy [mostly oil] today. Only renewables do not, and it is questionable if we will transition fast enough to not collapse society for lack of energy (though this is looking good)
Retaining wealth is the easy part, retaining political power is hard. They don't want to be regular jetsetting billionaires, they want to rule their own domain. And in order to do that, they need to figure out how to make people want to keep living there.
Money solves a lot, but not everything. At the end of the day it's still a country in a desert. Unfortunately that entire region is a repeating history of temporary wealth and stability that gives way to instability. When that happens the underlying constraints can quickly reassert themselves. Just luck at the history of Kuwait.
The point of the line is not that they aren't going to try, it's an acknowledgement of the extreme challenge in diversifying in the short term and incentivizing the next generations who are very, very comfortable with the status quo to build other income streams in the long term.
The US has long sought to erode OPEC’s ability to dictate global oil prices. The US has made massive progress in being broadly energy independent to isolate it from challenges elsewhere. The US has been a net energy exporter since 2019. Global oil pricing was always an annoying thorn in that strategy.
This is an initial but big crack in shaking up global oil markets in a way that meaningfully shifts global power dynamics.
They export because their own refineries along the Gulf coast esp were designed for middle east heavy crude cuz the US once upon a time believed it was about to run out of American light sweet crude. So the story is not black and white.
This is horrible from POV of mitigating the climate catastrophe and the global death toll. We (as in humanity) are really late in ramping down fossils production and use.
Eh if the U.S. gets into a forever war with Iran the same way we did with Iraq and Afghanistan and Vietnam (or like how Russia got into one with Afghanistan and Ukraine), the climate crisis is solved. Five years of the Straight of Hormuz being closed and everybody will be using EVs.
Legislation isn't going to work. Economics isn't going to work. War - which cuts off the flow of petroleum because nobody is willing to risk their life for oil - will work very quickly. Nothing quite like a shortage to spur innovation.
CAFE standards were always a stupid idea. If we want to reduce fuel usage then increase the tax on fuel instead of punishing manufacturers for selling vehicles that consumers want to buy.
This is, respectfully, corporate propaganda. Consumers buy the vehicles that are available and advertised. It's in the best interest of manufacturers to convince/compel consumers to buy larger, more expensive vehicles with higher margins, and that's exactly what they're doing.
How many CAFE compliant “light trucks” do you see around?
CAFE is a great example of a well-meaning regulation failing because the people who developed and approved it didn’t think through the obvious consequences.
How can that be if they all offer extensive lines of small and efficient cars that a good number of people drive? Besides, collusion doesn't seem likely given the amount of foreign competition. The majority of Americans have made it clear that they want bigger autos, at least with the usual gas prices. Sorry if that's corp propaganda.
Separately I've heard emissions laws blamed for large sedans losing to small SUVs and trucks due to double standards, but I doubt it would've made a difference, even though I personally prefer large sedans.
If gasoline is more expensive, customers will demand more efficient vehicles.
We aren't mindless zombies buying whatever we see on TV. I'm old enough to remember when Japanese small cars practically took over the market in the 70s and 80s due to gas price shocks. It can happen again.
If gasoline is expensive because of carbon taxes, people will vote for a party that tells them that climate change is not a problem, and that, if they win, gasoline will be cheap again.
They probably won't buy Honda Civics, but they (or their children, more realistically) might buy the electric equivalent of an F150 if the market produces one that can fulfill what they perceive their needs to be.
I just bought a (small, hybrid) truck because I need to do some truck stuff. I 100% would have bought an electric if the market produced one with comparable capability and competitive price, but we're not there yet, and I don't have Rivian money (yet! lol maybe someday).
My point being: there is still a huge demand for trucks from both a capability and culture standpoint, and very little supply of a cost-comparable product that doesn't take gas or diesel. Rivian is around double what most people want to pay, and the F150 Lightning was marketed poorly and had bad towing/hauling range compared to gas/diesel equivalents.
I'm not here to defend "truck culture" but I do believe that if you offer people a better product, they will figure it out and buy it. An electric truck with 400+ miles of towing range, an onboard 2kW+ inverter, 500 ft-lbs of torque, and fast charging for the same price as a comparable gas F150 will sell. Unfortunately the battery energy density and EV supply chain economies of scale aren't there yet in North America.
Whatever your standard is for an "efficient" vehicle, more efficient things than those 15-20mpg trucks or SUVs do exist in the US. Every automaker sells a serious car that gets at least 30mpg combined if gas-only, or like 50mpg if hybrid.
> We aren't mindless zombies buying whatever we see on TV.
But we are. I don't want to turn this into a political slap fight but it became apparent to me the extent in which people are swayed by advertising when I read an article that talked about how one party in the US was concerned that the other was going to win an important seat becase the other party had done a recent spending surge on ads in last few days before election day and they were concerned that they couldn't match it.
That article right there forever changed my view of the average person on the street. In a highly polarized campaign and political environment with months to years of knowing who the candidates and policies are and they can still be swayed by millions in TV and radio ads? Like it sounds like these people could literally be on their way to vote for a candidate and then switch their mind at the last second because they hear an ad on the radio as they're pulling into the polling station.
That's absurd -- but it's real.
People are completely enthralled by advertisements to the point where they'll buy a stupid truck that they can't fit anywhere, that they need a ladder to climb into, that has terrible sight lines, simply because advertising tells them to.
If you don't want to make this about politics, use a product advertising example instead of politics which is not even comparable.
Advertised products will sell more, but only to a certain point. No automaker can get away with marketing a 20mpg non-luxury sedan or compact no matter how much they advertise it. People are buying inefficient autos because it's something else they really want, be it a luxury car or an SUV or a truck.
Nah, it's not real. Your claim isn't supported by the data. Political advertising can help a bit at the margins but in the 2016 Presidential election the losing campaign spent about twice as much on advertising as the winner. Very few voters were swayed by last second radio ads.
(I would support a Constitutional amendment to restrict campaign contributions and effectively overturn the Citizens United v. FEC decision.)
Again, I don't want to get into a political slap fight here, I want to keep this on the subject of advertising.
It sounds to me like you're confusing the magnitude of advertising spending with effectiveness of advertising techniques.
Some people have found more effective ways to advertise to people, we know all this, it isn't uncharted conversation territory. We all know about micro-targetting based on personalized data, dominating certain niche mediums like AM radio to target people when they're driving and coordinated pushes with people in industry.
The point is that advertising works. It works disconcertingly well.
This is why people buy stupidly impractical automobiles that they don't need.
People want car insurance because it's a law, low-flow showerheads if water is expensive, and electric appliances if gas is expensive or outlawed. And they want fuel-inefficient vehicles because they like them and gasoline isn't very expensive.
Bullshit. There are many competing auto manufacturers. No one is compelled to buy larger, more expensive vehicles. There are smaller, cheap vehicles available to those who want them. If I want a little penalty box like a Hyundai Elantra or Nissan Sentra the local dealers have base models in stock and ready to sell today.
Larger vehicles are more comfortable, safe, and practical (for anyone who doesn't need to worry about parking issues). It doesn't take advertising to convince consumers about that, it's just reality.
A Hyundai Elantra of today is significantly bigger than it was ten years ago. It also used to be the second-tier model above the Accent, which was discontinued.
Domestic manufacturers used to build & sell compact pickup trucks. Nowadays, the only pickups on the market are huge fatmobiles. The profit margin in trucks is much higher than the profit margin on passenger cars.
Large vehicles are safer for the occupants of the vehicle, however they do increase danger for pedestrians and drivers of other vehicles in a collision. There is a reasonable argument that reducing vehicle size would save lives overall
Nope, not a myth. While the data is noisy and there are some confounding factors, the IIHS driver death rates show a clear correlation between larger size and fewer deaths.
> This is a myth. Larger vehicles are not safer for their occupants; they merely feel that way.
I'm pretty sure it's not, because physics. A tank is safer than a bike for the poilot, when there is a collision. This data is a little muddled, but follows common sense.
Large SUVs and Pickups: These vehicles have the lowest occupant fatality rates, averaging 14 deaths per million registered vehicles for SUVs compared to 48 per million for sedans. Large luxury SUVs often register statistically zero deaths in specific three-year studies.
Pedestrian deaths, including children, have risen in lockstep with light truck adoption in the United States, while they have fallen in countries without this phenomenon.
Vehicle emission and fuel efficiency standards are a great idea. The stupidity was allowing a "light truck" exception at all. It made the manufacturers turn to manufacturing and promoting what should be work vehicles to rich idiots who need nothing larger than a regular car (but can easily be upsold on something they don't need)
America is already fucked, given how awful its urban sprawl is. Trucks used for commuting and not haulage just makes it double fucked.
We shouldn't prohibit dumping toxic waste in the river, we should just tax it!
I am familiar with the EU situation. The carbon tax you would have needed to achieve the effect of fleet emission standards would have been political suicide.
And that is not just psychological. People who buy used cars and drive their cars until they fall apart are well correlated with people who can't afford high carbon tax. Buyers of new cars are the people who can. Carbon Tax would mean massive redistribution of the money raised. Yet another political mine field.
Not sure if you're facetious but there are plenty of examples of rising cigarettes' prices leading to reduction in smoking, or similarly a sugary soda tax reducing consumption of sugary soda (UK is a prime example).
Always gonna happen. Oil margins are gigantic and they'll use every dime of runway they can. Electric is better in every single way and batteries tech is only making that more true every day. The dinosaurs won't go quietly into the night.
I think the initial crack was ousting Maduro in Venezuela. Since OPEC exempts Venezuela from production caps, it gives the US government a lever on non US production.
Venezuela produces heavy "sour" crude (this means high in sulfur). Many of the US refineries capable of handling sour crude have closed, partly because the sulfur content makes the refineries stink (and emit lots of pollution) and partly because they need more expensive piping to handle the corrosive materials (not just the crude, but HF acid that's used in the refining process).
The last refinery to be built in the US opened in the 1970s. Since then, refineries have closed. None of the owners of refineries will sell them because of SuperFund legislation. It is the same reason that when a gas station is sold, the fuel tanks are dug up and replaced. This way, there's no way to claim that the previous owner left hazardous material to be cleaned up. SuperFund laws say that every previous owner is liable for the cost of cleanup. It doesn't matter how long ago the property was sold.
The US isn't insulated from global oil supply shocks because crude oil and refined petroleum products are traded on global markets and natural gas is somewhat traded on global markets (there are limits to LNG exports).
So yes the US could limit or ban exports. Many countries (including China) have done this in a kind of energy nationalism, but that hangs out allies to dry in a way that would make the US deeply uncomfortable. It would threaten European energy security. It would come at the cost of Latin American exports. So there's a cost to pay.
And more to the point, no US government regardless of party is going to hurt corporate profits by limiting exports. Biden could've done it in 2021-2022 and didn't. And Trump certainly won't. As one example, a big release from the SPR was on an oil-for-oil basis. Rather than cash ii on high prices, it's just a massive gift to oil companies who have to repay the oil (and then some) at some unspecified future point when oil will be cheaper. That's billions the US could've added to government coffers.
I do agree there is a power shift going on but not because of US energy independence. No, it's because the US cannot militarily protect GCC countries and cannot force open the Strait of Hormuz or guarantee global shipping, which has essentially been a US guarantee since 1945.
I do think this administration does want to crack OPEC but that's likely to be of massive benefit to China without China having to do anything.
Global pricing affects all fossil fuels and always will. Energy independence will remain a fantasy until we are fully on renewables. Which is entirely within reach and requires fighting zero wars.
...and up to that point, first world countries should not be complaining about developing nations using coal. It's a lot more shock resistant than diesel and natural gas, which is especially important for those that are so much more sensitive to inflation. From what I've seen coal, solar (hydro too, but that's land-dependent) and micromobility are save harbors. Not much they can do about the fertilizer shortfalls though.
When it comes to fossil fuels, there's no such thing as 'energy independence' because fossil fuels are traded on a global market. In addition, not all oil is the same. So you have to trade it because what you can extract may not be what is useful to you, but useful to someone else.
In short, the US cannot functionally be independent on fossil fuels even if we extracted every drop of oil within our borders--because we literally cannot use all of it, and most of it would be wasted just sitting around.
In extreme scenarios it is certainly possible for the US to ban exports of certain fossil fuels, effectively making an internal US market that is isolated from the rest of the world and basically energy independent.
Yes, we would need to build more refining capacity to use it all effectively, but in a cataclysmic event (i.e. a world war or something) the US would be much much better off than most other countries.
That makes no sense at all. We just had a post about several countries with energy independence who had done it with zero extractable resources. For them, the magic key was having tons of hydro and a small population. They just stopped importing. Countries like the US will need a lot more power and a lot more diversity of generation but it can be done if there was enough will to do it.
China is making great strides in renewables and investing in nuclear (and in electrification of transport). It can be energy independent in not too distant future.
India has geography for solar, and the human/industrial capability for nuclear.
Southern Europe can go solar as well.
Northern Europe has it tougher (except Norway, with its abundant hydro). Nuclear could work. Or long range DC cables from South Europe or North Africa (if ever Europe helps them to put their act together - not easy or fast, but definitely in their best interest).
How? Being a net exporter implies we make more than we use. Great. How do we force companies to not export until domestic demand is met? And how do we ensure that doesn't raise prices more than just running the system as-is?
If foreign supply is cut, we (assuming the US) can still do fine, even though is a sub-optimal way. The US crude is heavy, the Middle Eastern crude is light, so oil processing would need to adapt, the efficiency would go down, and prices would go up. But we'd still be up and running independenty.
If foreign oil supply were cut from China or India, they'd be in a much bigger trouble.
Geopolic: A US-aligned Gulf state walking away from a Saudi/Russia-led bloc in the middle of a war, after deciding the bloc didn’t really have its back
Economic: it weakens OPEC’s pricing power in a way you might not see right away if Hormuz is closed, but it could really change the supply picture once things reopen
UAE announced this week they might start selling oil in yuan so this doesn’t read like anything US aligned to me. If anything it reads like the opposite to me - a move away from traditional opec petrodollar system
I don't think there is any evidence that they actually need the dollar swap line - the dirham-dollar peg isn't at any risk and they have plenty of money for fiscal flexibility going into the foreseeable future. If you take financial reasons off of the table then it is clear it is just a political play for a bigger seat at the table with the US.
The Saudis did it to Biden in 2023, the UAE sees the opportunity to do it to Trump now.
They need the dollars because they're an import-oriented economy, almost all of which are conducted in dollars (nobody wants their dirhams because oil is priced in dollars anyways). Dollars are also useful for their sovereign funds to invest into the US, either in the stock market, or in private equity.
What happened this week - they announced they might start selling in yuan, they left the OPEC, and they started a new wealth fund to invest exclusively in China. That gives them an alternative for the dollar-peg since China is their biggest import partner anyways, while also giving their surplus yuan an alternative channel of investment into China.
Still they need the dollar-swap for the essentials - food from India and Pakistan, neither of which will accept their dirhams unless they get exclusive deals (which are not allowed in OPEC). It helps for them that India and Pakistan need lots of oil, and that a dollar peg benefits the UAE more than it does either nation. If the EU plays a greater role in trade, particularly in defence and maritime manufacturing, they will stockpile euros too, to the detriment of the dollar.
Still, they also bought some prime DC acreage to expand their US diplomatic corps, and will likely keep the Washington connection, so long as AI is perceived as useful. Right now, that's the only major export benefit the US provides the Gulf countries. This is them just hedging their bets.
At last report (Feb 2026) the UAE had ~$250b in foreign currency reserves. They have plenty of non-AED currency.
The Yuan is the current bogeyman the Gulf States use when they want attention from the US (not that they’re not diversifying, just that it isn’t a structural shift in a meaningful way). The UAE is making this play right now to make sure they are part of the conversation in deciding how things with Iran end and making sure their influence is sustained after the current administration.
The wealth fund is a way to deploy whatever yuan they receive while gaining political favor with China as well.
exactly. this sounds like a third path where the UAE charts its own course, and that course increasingly looks paved in Yuan.
OPEC cartel membership didnt gain it access to Hormuz, and the US petrodollar promise to protect UAE states from aggression in exchange for trade in USD could not be upheld.
> the US petrodollar promise to protect UAE states from aggression in exchange for trade in USD could not be upheld
Well the war is still ongoing, and Iran's regime is already feeling the pain of the blockade [1]. Pricing oil in Yuan because, I guess, the US is somehow not protecting the UAE doesn't make sense because China won't be there to protect them either. The US can just say, well fine you can sell your oil in Yuan. But we'll just blockade the Straight and seize oil priced in Yuan or something. Who exactly does the UAE need protection from? Iran? China's ally?
I swear I read this same story over and over again. There's always just an accusation "thing happened, here's how the US is now in a state of being screwed" and there's just never any follow-up or perhaps imagination that the US could just do something too. Hypersonic missiles? US Navy is done for, no possible counter. Iran has drones? Boom. US is done for no way they can spend Patriot missile money on $30,000 Iranian drones. Nope, nothing anyone can do at all. Iran "closes the Straight", well the US can't do anything. Now they are "embarrassed" and "slammed".
> OPEC cartel membership didnt gain it access to Hormuz
> Pricing oil in Yuan because, I guess, the US is somehow not protecting the UAE doesn't make sense because China won't be there to protect them either.
It is an admission that US protection was always a paper tiger. Perhaps in the 1960s it meant something, but Iran has shattered the illusion that Washington has any credible defense of the country.
> The US can just say, well fine you can sell your oil in Yuan. But we'll just blockade the Straight and seize oil priced in Yuan or something.
The UAE primarily sells its oil to China, which is its largest export partner, followed by countries like India and Japan. the United States cannot do this without not only obliterating energy markets for an ally, but strengthening alliances between china and india. It is likely that should the US attempt such a move, China would respond with retaliatory technology tariffs and a reduction of agricultural trade.
> Who exactly does the UAE need protection from? Iran? China's ally?
the UAE did not "need protection" from any regional military threat until the United States used regional peace talks as cover to launch a surprise attack against Iran. the UAE would still likely be an OPEC member state had the US not unilaterally chosen to obliterate global energy markets for no consistent or clearly defined reason.
> there's just never any follow-up or perhaps imagination that the US could just do something too.
This conflict was well defined as geopolitical suicide for nearly forty years; its what kept the peace. All simulations and tabletop exercises predicted such an incursion would send global energy markets into panic, trade markets into recession, and produce no meaningful advancement of either regional security or regime change. Iran is backed by powerful allies and has shown numerous times it can meet each US escalation with yet more regional attacks. We have tried escalation and failed, burned through a decade of advanced missiles fighting cheap drones, and have no defined objective politically or militarily for this conflict.
> It is an admission that US protection was always a paper tiger. Perhaps in the 1960s it meant something, but Iran has shattered the illusion that Washington has any credible defense of the country.
sigh No, it's not. There are 3 aircraft carriers parked in the region, plus US air bases. Iran launched over 2500 missiles at the UAE alone. The US destroyed much of Iran's military, the only thing they have left is the ability to launch missiles and drones at ships or do terrorist style attacks.
But if you want to suggest that the US is a paper tiger here, that just makes everyone a paper tiger. Nobody can stop Iran. Ok.
> The UAE primarily sells its oil to China, which is its largest export partner, followed by countries like India and Japan. the United States cannot do this without not only obliterating energy markets for an ally, but strengthening alliances between china and india. It is likely that should the US attempt such a move, China would respond with retaliatory technology tariffs and a reduction of agricultural trade.
Then we would react with export controls, additional weapons shipments to allies in the region, work with Japan and South Korea to start weapons programs, blockade Chinese trade, there's a million things we can do too.
> the UAE did not "need protection" from any regional military threat until the United States used regional peace talks as cover to launch a surprise attack against Iran. the UAE would still likely be an OPEC member state had the US not unilaterally chosen to obliterate global energy markets for no consistent or clearly defined reason.
And yet, UAE wants the US in the region and in UAE soil. Iran launched over 2500 missiles at the UAE, including civilian targets. Not sure your comment here reflects reality.
> This conflict was well defined as geopolitical suicide for nearly forty years; its what kept the peace.
Things change. US is the #1 energy producing country in the world in terms of oil, gas, &c. We're less dependent on the Middle East, plus we've basically secured the Venezuelan oil supply. Seems to me that what was once geopolitical suicide is no longer the case. We're here today, and life in the US just goes on as normal.
> All simulations and tabletop exercises predicted such an incursion would send global energy markets into panic, trade markets into recession, and produce no meaningful advancement of either regional security or regime change.
TBD
> Iran is backed by powerful allies and has shown numerous times it can meet each US escalation with yet more regional attacks.
Yes, Iran, who is supplying Russia with drones and such for its war against Ukraine is an ally, as is China.
> We have tried escalation and failed, burned through a decade of advanced missiles fighting cheap drones, and have no defined objective politically or militarily for this conflict.
We have not burned through a decade of advanced missiles fighting cheap drones. We can build our own cheap drones and are working on scaling production, and just because you don't understand the political or military objective doesn't mean that there isn't one, however poorly or well-thought it may be.
The US has very much escalated and sits now at the top of the escalation ladder. Iran has been trying to get the US to the negotiating table due to the blockade. Iran can launch its missiles as it likes to at civilian targets in the Gulf. We + allies will just get better at shooting them down. Who cares? If Iran wants to try to escalate we'll just escalate further, blow up more stuff, keep the oil from flowing if we decide. It doesn't really hurt us much.
> Iran "closes the Straight", well the US can't do anything.
Well, Iran closed the Straight and the world is facing biggest oil crises since 90ties. US was in fact incapable to prevent it. Even if the Straight opened today, harm already happened and will continue to happen for months. And I dont think it will open today.
The war did not had to start at all and is causing considerable harm already. Iran feeling pain does not mean surrounding states were protected - instead they were put into harms way.
> Pricing oil in Yuan because, I guess, the US is somehow not protecting the UAE doesn't make sense because China won't be there to protect them either.
At this point, China is more predictable and crucially, more likely to keep their word. Not exactly entirely predictable and not exactly truth teller, but the difference here is huge.
> The war did not had to start at all and is causing considerable harm already. Iran feeling pain does not mean surrounding states were protected - instead they were put into harms way.
They were always in harm's way. The war could have waited, and Iran could have doubled or tripled its missile stockpile and then they really would have been in harm's way. You're falling in to the same trap I mentioned "country does X, end of analysis".
> Well, Iran closed the Straight and the world is facing biggest oil crises since 90ties. US was in fact incapable to prevent it.
Any country is incapable of preventing it then. Iran could always just mine the straight and threaten to launch missiles and go hide in the mountains. If Iran wasn't doing all of these awful things in the region, none of this would be happening.
> They were always in harm's way. The war could have waited, and Iran could have doubled or tripled its missile stockpile and then they really would have been in harm's way.
I keep hearing this line defending US intervention but it doesn't really make sense. Iran was not threatening shipping traffic in the strait regardless of how many missiles they stocked up until they were forced to do so as an asymmetric warfare response to an attack by a superior military.
The missing ingredient has never been how many missiles Iran has stockpiled, it was external military action from someone like the US that gave them the window to assert that control.
The US didn't do the world any favors by getting it out of the way sooner or something, that's just absurd apoligism for a poorly planned war of choice that has obviously been a net negative for basically the entire world.
It would be like if the US nuked China and then shrugged after they predictably retaliated saying it just proved the threat from their stockpile that had always existed.
> I keep hearing this line defending US intervention but it doesn't really make sense. Iran was not threatening shipping traffic in the strait regardless of how many missiles they stocked up until they were forced to do so as an asymmetric warfare response to an attack by a superior military.
Why would they threaten to do so prior to being ready? Have you ever played a strategy game where you build up your forces for an advantageous offensive or defensive position? Countries do this too. If we were playing a game where my actions would provide some advantage or victory over you in some area or a broad area, why would I announce what my intentions were to you so you could react or anticipate my actions?
Separately, you can just ask: why are they even stockpiling missiles in the first place? Why isn't Singapore stockpiling missiles, or perhaps Portugal, or Panama, or Morocco? Of course, this then introduces the circular reasoning "because of a potential US attack", but of course if Iran wasn't funding Hamas, Hezbollah, Houthis, and more, building up these missile stockpiles, continuing to pursue a nuclear bomb, helping Russia with its invasion of Ukraine, we wouldn't be here. At some point you just have to look at their actions and their actions suggest implementing a plan.
> The missing ingredient has never been how many missiles Iran has stockpiled, it was external military action from someone like the US that gave them the window to assert that control.
They don't have control over the Straight of Hormuz. It's a bit of semantics, but control would mean they can allow or disallow ships to pass based on their own decision making. They can disallow ships, but the US can also disallow ships. If Iran controls the Straight of Hormuz because they can fire missiles at ships, the US also controls the Straight of Hormuz because of that very same capability.
It is not a game. And this war happened because Israel and USA assumed Iran is weak.
This had squat zero with acute danger of military buildup. This happened because Hegseth thought Iran will fold and found it super unfair they did not.
> Separately, you can just ask: why are they even stockpiling missiles in the first place?
To protect themselves when America starta Another war. It cant go without war for long. As brutal as iran is, there was no imminent threat of expansion
It is israel who just displaced millions of people.
Is the idea here that only USA gets to have missiles?
Iran is weak compared to the United States. The war wasn't started because Iran is weak, it was started because Iran is engaging in various activities that have effects in the world that the United States finds unacceptable.
> To protect themselves when America starta Another war.
Yet, only Iran has to protect themselves. Why is that? Well it's because they're doing bad things, and they know that we may do something about it. Why isn't Peru stockpiling missiles, or Thailand, or Iceland? It's because Iran's government was seized by an authoritarian regime that hates America and decided we would be the enemy forever and has continued to attack, and take other violent or non-violent actions that destabilize the region and global trade. If they just stopped doing this stuff, there wouldn't be a reason to "attack".
> It is israel who just displaced millions of people.
I don't think so. But Iran is responsible for Syria and those millions of people too. Like Maduro is responsible for the 8 million + refugees from Venezuela.
Your point of view of the world does not match reality. Stop making excuses and defending brutal authoritarian dictatorships.
> Is the idea here that only USA gets to have missiles?
Well you believe in nuclear non-proliferation, right?
Those states could export oil entirely reliable. They had tourism and finance industries dependent on them being safe.
Iran did not mined strait until USA and Israel bombed it twice during negotiations, threatened civilisation destruction, murdered political leaders and attacked BOTH civilian and military infrastructure.
You dont get to start a war or bomb and then blame the other side for not passivele accepting the situation.
Iran threatens to erase Israel and the United States off the map pretty much daily. So I just don't care that Trump did the same back to them. If they don't like threats like that, perhaps they should stop issuing them yea?
> murdered political leaders and attacked BOTH civilian and military infrastructure
What civilian infrastructure was deliberately attacked? We do know that Iran deliberately attacked civilian and military infrastructure. Did you mix the two up?
> You dont get to start a war or bomb and then blame the other side for not passivele accepting the situation.
Who started the war isn't an easy question to answer. I can easily and obviously argue that Iran started the war when they attacked Israel through their proxy forces. Ultimately though who "started" the war doesn't matter that much. Both sides have had grievances for quite a long time and things are just finally coming to more direct conflict.
>Well, Iran closed the Straight and the world is facing biggest oil crises since 90ties. US was in fact incapable to prevent it. Even if the Straight opened today, harm already happened and will continue to happen for months. And I dont think it will open today.
Adjusted for inflation the price of oil isn't even the highest it's been this decade, let alone historically.
The price tripled from 2003-2008 as well.
>The war did not had to start at all
We probably won't know for twenty years if that's true or not. It's not as Iran's been some peaceful country for the last twenty years, they actively have sponsored terrorist organizations with the purpose of destabilizing the region. The country also sits on a wealth of natural resources but was solely researching nuclear power for peaceful purposes.
Really the big lesson for the next superpower is to simply act earlier. If you don't care about winning and just being a thorn in everyone's side, ballistic missiles are a great investment, and it should have been taken more seriously when Iran started stockpiling thousands of them.
> Adjusted for inflation the price of oil isn't even the highest it's been this decade, let alone historically.
I dont think UAE cares about American oil prices that much. Nor does Europe nor does Asia. That just meand America is less motivated to solve clusterfuck it created.
And yes, it is huge issue already. With flies cancelled for summer, with strategic reserves already being used, with homeschool and home office in some countries, shorted workweek in others, factories producing less.
> We probably won't know for twenty years if that's true or not.
We do know that. There was no urgent reason to start badly prepared war. And no involved country is peaceful.
> The country also sits on a wealth of natural resources but was solely researching nuclear power for peaceful purposes.
It was entirely legal for them, because literally USA teared down agreement to do the opposite.
And what everybody knows now is that the only way to be safe from aggression is to have nuclear.
Yea there is some truth to that. The US is still in a wartime economy and cultural mode of thinking post-WWII (military budget, highway and infrastructure build, cultural characteristics around guns [1] and such). The downside is the degradation of quality of life, rage-bait, stress, those sorts of things. But if we have Americans constantly freaking out (and to some extent they should - being #1 is tough) about Chyna that does put pressure on the government to take these concerns seriously if they previously were not.
[1] Not a 2nd Amendment criticism, I’m a strong supporter. More so the folks who load up on ammo and “cool” gear and all that stuff.
Im not concerned with them selling with the yuan as China regularly screws around with its currency. The bigger issue is and other currencies which reduces the US impact.
On the backside I’m sure there will be lots of fun back door deals around all those interceptors and future anti drone technologies. Today though the US has been the impetus of a lot of the current issues.
They kind of are. Iran has been attacking everyone in the Middle East for decades, occasionally seizing or destroying ships in Hormuz, and funding internal dissent. Things are worse right now, but not that much worse, and the short-term pain might very well be worth it for the long-term reduction in Iran's capabilities.
Uh, from the UAE's perspective it is much worse. They sold many $Bs worth of oil and had become a global tourist hub, now they can't do those things. They are being patient for the time being but there's a limit. We don't know what that limit is but if 6 months go by and the Strait's not open can we really expect them to not pay Iran a toll and price their oil in yuan?
What are you talking about? This level of escalation hasn’t happened for at least a quarter century. I know, because I’ve lived in the gulf for large parts of that period
Has the GCC been in an existential state of panic to the point where they’re seriously questioning their relationship with the US any time in the past 30 years?
Kuwait was “saved” by the US. The Iraq invasion was approved by the GCC, partly as payback for Kuwait, and anyways Iraq is not part of the GCC. The Qatar blockade was self-inflicted (and extremely stupid).
That doesn't mean the warnings were frivolous. There was ultimately a change in course which averted it. How sure are you that will be the case this time?
My guess is that is this because UAE has ports on the other side of Hormuz and doesn't want to be restricted in their usage by OPEC? Does this mean UAE thinks Hormuz will be a problem for a long time? And what does it mean for oil prices long term?
> My guess is that is this because UAE has ports on the other side of Hormuz and doesn't want to be restricted in their usage by OPEC?
Does OPEC limit that? It would be very surprising to me if they did, as the point of opec is only to limit production when oil prices are low. They aren't low right now.
The UAE has the ADCOP (Abu Dhabi Cross Oil Pipeline) to move oil to beyond the Strait. It has a capacity of ~1.8Mbpd (million barrels per day) so is only a fraction of the UAE's total oil exports and a tiny fraction of the oil exports impacted by the Strait being closed. It's also being used already. I don't know how these particular oil exports have been impacted. They are beyond the Strait but not by that much. Iran is still entirely capable of harassing shipping there.
I believe the US has given tacit approval or is behind this move entirely for what comes when the Strait inevitably reopens and that is to get the UAE to export well beyond what they might otherwise as an OPEC member.
The UAE like most GCC countries is entirely dependent on US arms to maintain their regime so I simply cannot imagine them doing this without the US putting them up to it or looking the other way.
It also looks fairly easy to mine/blockade outside of their territorial waters. You don’t need that many drones to make the whole area unusable for marine transport. The strait is the clearest choke point but I don’t know how much bypassing it would help UAE
As democratic popular opinion turns against classical liberal economic principles, many theocratic or monarchist hell holes are increasingly becoming the unexpected underdog turned winners in economic freedom. It's been fascinating to watch.
My understanding is that unique historical, cultural, and even geographical factors have led to this outcome for Oman. I would encourage you to read up on the history of the country to understand the nuance here and not paint with such a broad brush.
Everyone has a unique "..." and a nuance here and a nuance there.
UAE has a unique yada yada and also ended up with a surprisingly remarkably free economic index despite being a theocratic monarchy.
As did the monarchy Lichtenstein, British controlled Hong Kong, and the one-party state of Singapore (technically democratic, in practice it functions like a recallable monarchy).
Also of note the three richest countries by GDP PPP per capita are Monaco (hybrid monarchy with monarchist veto powers), Lichtenstein (hybrid monarchy with monarchist veto powers), Singapore (single party state).
> one-party state of Singapore (technically democratic, in practice it functions like a recallable monarchy).
This is untrue. It would be more accurate to say that the same party has been in power since independence from the UK. Each election in the last 30 years has slowly moved the needle -- fewer and fewer of seats held by the majority party (PAP). I guess there will be a non-PAP prime minister in the next 20 years. Sure, it doesn't look like other democracies, but please don't call it one-party. Also: See Japan. Many outsiders just don't understand democracy in Japan and try to impose their worldview on a different type of democratic system.
I'll yield that it isn't a pure one party state. There is some room for difference of opinion whether you want to characterize it as one or not.
But let's not play the bullshit and borderline xenophobic, ad-hominem attack that it's just "outsiders" who "just don't understand." Or try and distinguish that it's people 'imposing their worldview' (something every human does no matter what they are arguing).
But don't take my word for it. Read what Lee Kuan Yew had to say himself[0]:
The PAP represents the broad middle ground in society and attracts the best and brightest people into Government, LKY said last night. He therefore did not see a two- or multi-party system emerging in Singapore soon.
Ah yes, good ol LKY, the outsider who just doesn't understand Singapore, and with such a non-Singaporean 'viewpoint' that he had quite popular support (even if you want to argue it is a minority, it was widespread enough as to be valid enough to be considered one valid and widespread Singaporean point of view). Calling it not a two or multi-party system, leaving quite obviously his assertion is that it's a one-party system.
This and other points, documented by Yeo Lay Hwee (Senior Fellow, Singapore Institute of International Affairs) , who even if she flip flops between suggesting Singapore is a one-party state, lists quite a few reasons why it is a reasoned viewpoint from an understood observer [1].
I'm not sure what the conclusion is from this other than that the wealthy love having an autocratic tax haven microstate to park the money they earned from liberal democracies in.
Oman benefits significantly more from the war in Iran than the UAE, but is the most favorable country towards Iran in the GCC. See the visual here: https://archive.is/Xt3gd
Saudi Arabia and the UAE have been urging the US to bomb Iran since 2015 for their own non-oil reasons. They see political Islamism as a strategic and domestic threat. That's why they had Qatar under a blockade for a number of years. Iran is their biggest rival, exporting militancy to Yemen - the Houthis who UAE and Saudi Arabia battled for a number of years last decade. A number of attacks on Saudi and UAE oil and gas facilities from Iran Quds-backed militant groups in Iraq across 2019-2022. None of this makes the news in the West.
UAE's major issue with Saudis is their quiet support for Islamism as well. They know countries like Iran exploit for it like a wildcard which always backfires and destabilizes the region, which is bad for business.
MBZ is definitely more anti-islamism than the saudis. UAE really doesn't like muslim brotherhood while Saudis have supported groups aligned with them in Yemen plus Saudis are getting closer to Turkey/Qatar.
Even UAE/saudi backing different groups in Sudan war is rooted in Yemen/brotherhood issue. Both Sudanese groups sent competing troops to fight in Yemen.
> While Saudi Arabia does not have any problems with Islamists and in fact more or less openly supports them, according to Donelli, the UAE sees radical religious groups as a threat to its domestic stability, as well as stability in the wider region. This distinction is also evident in the two countries’ support for the respective sides in Sudan. The UAE supports RSF’s more secular version of Islam, whereas the SAF under al-Burhan’s leadership is widely seen as more or less a continuation of the regime of Omar al-Bashir, which was heavily influenced by the Muslim Brotherhood. https://nai.uu.se/stories-and-events/news/2025-02-07-gulf-st...
> UAE's major issue with Saudis is their quiet support for Islamism as well.
What is the meaning of "Islamism" here? GCC is something like 98-99% Muslim by native population. Also, Saudi Arabia is the home of the two most important masjids in the Islamic world.
ISIS and Iran are pan-Islamist, which is the strain of Islamism that the UAE and Saudi Arabia fear most. Pan-Islamists don't respect national boarders, democracy, nationalism or monarchies.
They are a wannabe Israel, a bad faith actor sowing chaos for geopolitical advantage. They've been spending money on Washington lobbyists to advocate for this war for a long time. And this isn't the only skulduggery they've been up to. They've supported the warlord Haftar in Libya and the genocidal RSF militia in Sudan.
They've hired American mercenaries to assassinate Islamist civil society figures in Yemen. They pay European right-wing influencers to spread anti Muslim content (yes you read that right). They are the buyer for conflict gold coming from the Congo. In short they are a problem.
> Legal experts, analysts and local officials warn that the ultimate objective is the “emptying of residential geography”, carving out a depopulated “buffer zone” at the forward edge of the border that permanently prevents displaced residents from returning and establishes a violently enforced demographic reality on the ground.
That's called "ethnic cleansing" when carried out by other countries. Iran will not agree to peace while this is going on. Partly because that's Iranian proxy forces in there among all the civilians getting killed.
I think you underestimate the impact of a blockade on Iran's ports... Iran (and China) can maintain this posture for ballpark a month or so more before economic mayhem leads to another popular uprising. Time is in the US's hands up until the midterms and even then until January
I think you underestimate how little economic pressure matters when people are up against an invader who attacked amidst negotiations for bogus reasons, threatened total annihilation, and killed thousands, including a school full of children.
This is a population that absolutely despises their government. At least a very large percentage are in that category. I think you misunderstand the reality on the ground
Iranians despise their government in about the same way that Americans despise their government - which is to say, both peoples got the government they deserve...
If the Chinese take on the burden of maintaining the free flow of shipping through the Gulf by stepping up as one of the key beneficiaries of said shipping that would simply be an appropriate burden sharing mechanism in my view.
hmm .. imho .. the supply chain between Iran, Russia, and China is .. radically .. under-estimated in the equation by those states who have lost control over the worlds energy supplies.
It is more like the Western nations which cannot withstand another month of all this 'posturing' .. But there is some resilience to the idea that the Iran/Russia/China corridor is going to keep those nations relatively buffered from total disaster.
The UAE was talking about getting a credit swap line from the US. It could be the condition.
Or it is also part of a long term plan of the US to control all energy routes. It will keep Hormuz closed and try a new pipeline via the UAE to the Gulf of Oman.
Fragmentation of the energy producers is another goal. New Alaskan LNG projects have been approved and are all the rage among senators:
"Alaska LNG will deliver vital #EnergySecurity for our military and allies in the Pacific. Thank you @SenDanSullivan for your continued engagement and advocacy."
The US would control the following:
- Baltic sea via pipeline threats.
- Corridor from the Caspian sea from Azerbaijan through Armenia to Turkey.
- Venezuela.
- UAE corridor to the Gulf of Oman.
Probably much more than that. Grabbing the Arctic route via Greenland has failed so far.
This is the US trying to salvage the petrodollar. They want those t-bills and oil priced in dollars to maintain reserve currency status, but the whole world is divesting anyway. UAE is hoping that by leaving OPEC they can continue to do business and get protection from US. But US isn't gonna risk a larger war just to defend UAE, US has plenty of oil to exploit in Venezuela and at home. So UAE is just kinda screwed, and petrodollar will become north-american-petrodollar. My guess is it'll happen by Q1 2027
The petrodollar and petroeuro is misunderstood. The real point: These oil/gas exporting nations don't have enough investable assets in their own nations. As a result, they need to invest overseas. For a long time, the best places to invest this excess capital in the world were/are North America, Europe, and Northeast Asia (Japan/Korea/Taiwan). If you want to say that petrodollar or petroeuro is doomed, what will replace it?
It's not that the petrodollar is doomed, it's just 'devaluing'. The US isn't a stable, safe place for cash anymore. But the world still needs massive amounts of safe cash. So there really is only one alternative: diversify.
They'll diversity into Gold, rare-earth metals (they're only getting more important), CIPS, Yuan, Euro. That diversification helps everyone else, but will hurt the US, which hurts financial markets, and thus everyone else. And once they're all divested, the diversification will add risk and losses. Can't be helped though, they still need security. So we're looking at a generation of slow global decline, probably propped up slightly by the industrialization of AI (which of course China is leading the world in, as nobody cares about "better", they care about "cheaper"). China is the real winner, because all they need is oil, and their partners will make sure they get a steady supply (because it's in their partners' interests; that's what having allies is all about).
US can't stop this; their military isn't equipped to fight wars on multiple fronts, their lumbering, expensive weapons can't be sustained in a protracted conflict, their wars aren't popular at home, and they don't have the manpower. Even when they eventually start the draft back up it'll take years to build up their warfighting capabilities, and by then the world will have diversified enough that they can take the hit. (The US will try a World War anyway to try and retain the Empire, because their leaders are psychotic morons and their people are compliant, but they'll still lose. (Historic parallel: Sparta. Great military, but tiny, so most of their power came from wealth and tenant states; eventually the rest of the mediterranean got tired of their shit (installing dictatorships, alienating allies) and their empire died. Hell, even their Navy was paid for by Persia - foreign investment used to weaken rivals via proxy war))
I don't think this is avoidable. Nobody trusts the US now. The divestment has already begun. Countries aren't suddenly going to change their minds - even if Trump doesn't overthrow the government to cement this new status quo in 2028 (which he 100% will), the next President could be another Trump. Nobody wants to be subject to their insane policies (foreign & fiscal) anymore. So the US isn't a secure place for cash. Nations aren't just going to shrug and ignore it, they're going to act to protect their interests.
To be honest this comment kind of reads like anti-US fanfiction.
>That diversification helps everyone else, but will hurt the US, which hurts financial markets, and thus everyone else.
These are huge jumps in logic, I'm not even sure where to begin. I guess the most glaring question is: If other countries are actively diversifying from US assets as you claim, why would they still be so hurt by a US financial market downturn?
>And once they're all divested, the diversification will add risk and losses.
Since when does diversification ADD risk, and how would losses be incurred?
>which of course China is leading the world in, as nobody cares about "better", they care about "cheaper"
Also a huge claim to make. You'll find plenty of people who want the best models and are pretty price-insensitive, especially among those who get the most economic value out of AI.
I’ve developed a simple heuristic: If someone unironically invokes petrodollar as an explanation for anything in 2026, they’re probably not worth taking seriously.
It does seem like the petrodollar is coming to an end. Even if we wanted to keep killing/abducting the leader of every tiny oil nation shortly after the decide to sell oil in another currency (like we did to Iraq, Libya, and Venezuela), bigger ones we can’t just do that to practically are going to start.
The writing is on the wall. It might take decades, but it’ll end.
Unlikely. Out of OPEC’s twelve members [1], one is controlled by Trump, one—the third largest—is bombing the UAE and the other—the absolute largest—is on the other side of every proxy war the Emirates are invested in. As a multi-lateral organization it’s about as fucked as BRICS.
Serious question: what is OPEC’s influence in 2026? Most analyses I’ve read suggest that it’s essentially a defunct organization and has been since the 1980s, due to (1) a lack of geopolitical agreement between members, and (2) a lack of punishment/compensatory mechanisms for when individual members cheat on their commitments.
OPEC member countries control approximately 50% of the world’s crude oil exports. Additionally, OPEC nations hold nearly 80% of the world's proven oil reserves.
It's a good question. Let me answer the question this way: OPEC is the biggest single factor for the inflation shock of 2020 to 2022 yet weirdly hardly anybody talks about it.
Let's rewind to March 2020 and the start of the pandemic. For a very brief period, April oil futures went negative. Technically, this was an extreme contango market. Oil producers were running out of places to store oil and nobody was buying.
For some more background, OPEC tries to maintain oil price stability. If it gets too low, they don't make enough money. If it gets too high it creates political instability and jeopardizes security relationships with the US and Europe. So every 3 months OPEC meets and looks at oil supply and the projected demand and they adjust production to maintain a price floor and a price ceiling. Before the war this was typically $70-80. In years past it might've been $60-70. They don't always succeed because of exteranl factors, unforeseeable changes in demand or even just member countries lying about production or production cuts.
So in April-May, the then Trump administration went to Saudi Arabia to get them and OPEC to cut oil production [1][2][3]. Instead of the 3 monthly reviews which would've naturally cut production anyway to maintain the price, Trump browbeat MBS into a 2 year production cut, initially 9.7Mbpd (million barrels per day) and then reducing over time to I believe 6.3Mbps [4].
This was a disastrous deal. You can overlay a chart of the 2 year deal and global inflation and they match up pretty much exactly.
The Biden administration quietly went to MBS and asked him to end the deal. He refused. There are historical reasons for this, namely that the US (under Trump) had kinda screwed Saudi Arabia over in 2015, 2017 and 2018 but I digress.
So in the US the politics of this were that Republicans were going to pin this on Biden (even though it was a Trump deal) and the Democrats were never going to blame Saudi Arabia. Instead it was just "oil companies are greedy and bad" from a pure short-term politics POV. Nobody brought up the 2020 OPEC deal. And that's wild to me. It just goes to show that US foreign policy is uniparty and a Democratic administration was never going to publicly split with an ally like Saudi Arabia.
So does OPEC matter? Well they were instrumental in enforcing that deal. So you tell me.
That really does highlight how badly the US is a controlled petrostate, and how different that is to past events where the US goes around demanding that OPEC raise production.
OPEC doesn't adjust production. They set production targets, and then most of the members cheat. For geological reasons it's not even really possible to significantly reducing production on many oil wells without damaging them. Saudi Arabia generally has more freedom to throttle production up or down than other OPEC members.
You have another thing which is that MBS (correctly) felt comfortable ignoring Biden. If he'd slighted Trump in that way it would probably take 2 private jets to undo the damage.
My understanding is basically that OPEC is similar to a workers union. Countries band together and set terms that dictate the price and the supply available in the market.
UAE leaving OPEC is like breaking up a workers union. UAE is no longer required to restrict how much oil it exports, and also doesn't have to set a price floor. They're allowed to sell more oil cheaper, potentially at the expense of neighboring OPEC countries.
Which to me sounds like a good thing for the rest of the world?
Ordinarily a Cartel is illegal. If say the US breakfast cereal manufacturers decided to all agree they'll charge a minimum $20 per kilogram, no bulk discounts, the government can and likely will (assuming they don't remember to bribe Donald Trump) prosecute them and force them to stop doing that.
If you've been involved in an SDO ("Standards Development Organisation" think ISO or the IETF although the IETF would insist that they are not in fact an "Organisation" they will admit to being in effect an SDO) you've probably at least glanced at documents explaining that you absolutely must not do anything which looks like Cartel activity, you can't use the SDO to agree prices, or to cut up territory or similar things. The SDO's lawyers will have insisted they make sure every participant knows about this because they don't want to end up in prison or worse.
However the trick for OPEC is that it's a cartel of sovereign entities. It can't be against the rules because its members are the ones who decide the rules. So Chevron and Shell and so on cannot be members of OPEC but the UAE and Venezuela can.
> Which to me sounds like a good thing for the rest of the world?
It probably isn't a bad thing, but let's not overestimate the beneficial effects. The reason oil prices are high right now isn't because of cartel fuckery, it's because of Trump and his war. And oil supply chains are in such chaos because of Trump's war that even if it ended tomorrow it would take markets multiple years to return to a pre-war state.
The bottom line is that oil prices are going to be elevated for years to come, and when oil prices are high, OPEC has nothing to do other than sit back and collect the profits. And thanks to the ongoing solar revolution, oil's days as the world's predominant geopolitical poker chip are numbered; by mid-century OPEC won't be relevant anyway.
By mid century, worldwide fossil fuel usage will be higher than it is today. Solar will take over some of the electricity production including transportation but in the overall energy mix it will largely be a supplement, not a replacement. Total per capita energy use from all sources will continue to increase at a rapid rate.
> By mid century, worldwide fossil fuel usage will be higher than it is today.
Even if this turns out to be true, it would be irrelevant. The reason that oil occupies the geopolitical role it does today is because of its potential to rapidly bring the entire developed world to a halt. Oil will always be in demand because of its many useful applications (and this demand may even grow in absolute terms despite declining per-capita consumption, because the global human population is projected to continue increasing well into the latter half of the century), but as an energy source, by 2050 it will have so many highly-available complements that an oil cartel will be as relevant as a potato cartel.
The basics are the same as any other cartel. OPEC states cover enough of the supply-side of the market to be able to keep prices artificially high.
UAE leaving means UAE can price below OPEC's target and take more of the market. OPEC will have to react and lower prices or concede some of the market.
Does any of this matter if the major players can't ship oil through Hormuz? Who knows...
OPEC was never a very effective cartel in the first place. Many of the members routinely exceeded production targets. And for geological reasons it's not like most oil wells can even be throttled down.
Storage facilities allow for market supply control.
And while it's true many member exceed targets, it's like speeding on US highways: everyone does it, but anyone driving 20 mph faster than the pack is nobody's friend. Karma will happen.
None of the OPEC+ members have sufficient storage facilities to allow for meaningful market supply control. And karma isn't a real thing: most OPEC+ members are more like rivals then real allies. They'll agree to one thing and then do another, secure in the knowledge that there will be no serious consequences.
OPEC is a cartel of Arab oil-producing countries, including UAE. They limit production in order to keep the world oil price artificially high. UAE is pulling out of the cartel, presumably so it can bypass the restrictions and cash in on the high prices caused by the Iranian conflict. AFAIK this is the first time a country has pulled out of OPEC, and hopefully, it will lead to its demise.
The very short explanation is that they kind of want to be not-Saud and has trouble cooperating with Saudi Arabia for a rather long time, not just over fossil fuels but also in Yemen.
Recently the UAE faction in Yemen was forcefully reined in by the house of Saud, and OPEC kind of prioritises different things than the UAE, i.e. not pushing profits hard in the short to medium term instead focusing on stability and predictability.
Currently the saudis are trying to resolve the Hormuz issue and the attack on Iran through diplomacy, which the UAE is not exactly fond of and would rather see a violent solution. In part this is coloured by the close relation between the UAE and Israel, both of which share the view that running militant factions in failed states is preferable to orderly international relations between sovereigns. The saudis aren't as keen on this type of foreign policy and in other aspects also not as friendly with Israel as the UAE.
The UAE has been signaling that they don't really want to be a part of OPEC since at least 2020 or so. Them actually leaving was to be expected, the question should have been 'when' rather than 'if'. Iranian retaliations on the UAE and subsequent damage to the reputation of mainly Dubai and Abu Dhabi as well as capital flight probably strengthened the UAE politicians longing to get out of OPEC and start pumping and selling at full capacity to try and make as much money as possible as fast as possible.
If the UAE does not do this it'll be more exposed to credit and currencies besides the US dollar, which they probably find rather inconvenient.
Can somebody knowledgeable help me understand why this is in the interests of the UAE? Also, seems like a moot point since the strait is closed. Why do they think it’s in their best interests, and why now?
It was initially more union-esque to prevent being played off against each other and a dash of ideology. Then it became a cartel with the goal to to increase income / stabilize the market as well as a general international-economic-political forum because so much of their economies depend on oil.
Production limits were always a bit shady. Most meetings were just nations declaring what they'd (be able to) do and then a lot of talking to maybe see if things could be tweaked a bit and come up with a statement that made it look useful.
Their last 'success' was before Russia-Ukraine where they basically tried to suppress the price to make US shale too expensive and reduce its market share. Which happened. But again, debatable to what extend by OPEC's influence while they do write their own press release - with the explicit goal that the perception of power increases the price more.
Currently the entire region is going up in flames and allegiances are being stressed to breaking point.
The UAE leaving - as far as i can tell - is just a middle finger telling some of the club members its a farce and useless when it comes to its goals and (soft) powers, in the new reality of war & US export dominance. The middle finger being a political signal as everyone seems to be in disagreement on how best to handle the Israel-US-Iran war.
Probably Saudi Arabia is more important in OPEC, so that might be actually a middle finger to SA. Saudi Arabia and UAE had a recent dispute in Yemen that went pretty hot.
An alternative is the US trying to dismantle OPEC together with its new found supply in Venezuela to drive prices down
1) The UAE has its "Abu Dhabi Crude Oil Pipeline" (see https://en.wikipedia.org/wiki/Habshan%E2%80%93Fujairah_oil_p...) to Fujairah export terminal on the "Gulf of Oman" bypassing the choke-point of "Strait of Hormuz" entirely. Given the current blockade of the strait and its uncertain future, Fujairah is now central to crude oil shipments for the World Market.
2) Thus far, the UAE has been prevented from maximizing its revenues due to OPEC/OPEC+ production caps which is no longer acceptable due to global needs. It can now chart its own independent course by ramping up production and earn hard currency which can be its leverage against an uncertain future. For instance, UAE just signed a deal with South Korea to give it guaranteed "priority access" (meaning first before others) and "joint stockpiling" (for world market) of 24 million barrels. Other countries in Asia who have storage capabilities are also "tripping over each other" to cut similar deals with UAE. This is once-in-a-lifetime opportunity not to be missed.
3) Discontent with OPEC/OPEC+ and its members since the current conflict has made it clear that nobody will come to its aid when the chips are down (other than the US). It is "every man for himself" now and thus UAE has decided to chart its own independent path.
This is very welcome news and i hope other OPEC/OPEC+ members will also follow suit in their own national interests.
1) The pipeline to Fujairah has capacity of 1.5m barrels per day, i.e. less than hald of UAE's current oil production.
They still need Hormuz badly.
2) They can gain by increasing their production, IF they can get that out through Hozmuz. And IF (after Hormuz is opened) other OPEC+ countries DO NOT decide to do the same and the price of oil collapses.
3) US did not meaningfully came to their help. The high-end air defense systems were reserved/moved to Isreal. They mostly defended themselves, with the stuff they bought over the years from the US. A slightly cynical take would be 'classic protection racket'.
4) The national interests of other OPEC members are best served by being united against greater forces from outside region, not by fracturing and bickering among themselves. This is classical divide and conquer.
> 1) The pipeline to Fujairah has capacity of 1.5m barrels per day, i.e. less than hald of UAE's current oil production. They still need Hormuz badly.
Not quite. ADCOP was carrying 50% of UAE production (1.5-1.8 million bpd) and is being ramped up significantly. OPEC had limited UAE's output to 2.9-3.5 million bpd thus far and since the conflict UAE has been targeting 5 million bpd. With this announcement the dependence on Hormuz is being lessened drastically.
> 2) They can gain by increasing their production, IF they can get that out through Hozmuz. And IF (after Hormuz is opened) other OPEC+ countries DO NOT decide to do the same and the price of oil collapses.
As pointed out above Hormuz is being bypassed with ADCOP's capacity being ramped up. I am willing to bet, this announcement is what will get Iran to seriously consider removing its blockade of Strait of Hormuz since its main leverage will be gone. A good example is Russia's loss of leverage over Europe when most of the EU countries cut their dependencies on Russian Oil/Gas since the start of the Ukraine war.
> 3) US did not meaningfully came to their help. The high-end air defense systems were reserved/moved to Isreal. They mostly defended themselves, with the stuff they bought over the years from the US. A slightly cynical take would be 'classic protection racket'.
> 4) The national interests of other OPEC members are best served by being united against greater forces from outside region, not by fracturing and bickering among themselves. This is classical divide and conquer.
Nope; OPEC/OPEC+ exists only to serve the interests of Saudi Arabia and Russia. The others went along since money was rolling in anyway. But now the geopolitical situation has changed and every member has to look after its own national interests.
1) any sources for 'is being ramped up significantly'? To what capacity?
2) how much are you willing to bet? :-)
3) selling them arms and then causing a conflict where they expend those arms is a protection racket, not a help
4) stating claims does not make them true. Is it in their interests for the oil prices to collapse? It is a classical prisoner's dilemma. Coordination helps all of them. Being on their own allows external players to target/influence each of the small ones separately, at their weakest. Classical divide and conquer.
Counterintuitively, I see modern OPEC as mostly net-positive for the West because business and government most cherish stability which OPEC helps provides (emphasis on helps).
This is how peak oil happens. Without a healty cartel, oil is doomed. Solar, wind, geothermal, hydro, nuclear. These are more than ripe to disrupt energy into the 21st century.
The goal of the cartel was to stabilize prices right in the sweet spot to keep the world addicted. Too low and players start losing money, too high and people switch away from oil, too much volatility, and people switch away from oil.
Only the non-competitive ones. That's how competition works.
OPEC would be deemed an illegal anti-consumer price fixing scheme under the laws of any country with even the most basic of anti-trust laws, if not for the fact that its entirely composed of sovereign countries not subject to any law but their own.
If the price is too low and fields stop being exploited because they're unprofitable, you reduce the volume produced each day. That means there's scarcity with a low price, and you're back at trying to switch en energy source because you just can't get oil.
That moves prices upward, because people are willing to pay more, but increasing production is not like turning the faucet in your home. It takes time. This is the instability of oil production that OPEC tries to prevent, to keep the world hooked on readily available just cheap enough oil.
In a free market "scarcity with a low price" is a contradiction. If there's scarcity the prices will be high, not low. And nobody's going to be reducing production if the prices are high.
> instability of oil production that OPEC tries to prevent
First of all, if the goal is to prevent instability OPEC is doing a terrible job. Secondly, a cartel is not needed to prevent price instability, as demonstrated by the hundreds of other commodity markets around the world which are not controlled by cartels engaging in price fixing schemes.
As with any cartel, the purpose of OPEC is to maximize profits for its members, artificially fixing the price of oil at a level higher than what it would otherwise be in a free market not controlled by a cartel. Price stability is a side effect of that, not the goal.
> First of all, if the goal is to prevent instability OPEC is doing a terrible job.
I mentioned this upthread, the instability OPEC is trying to prevent is civil unrest from not being able to fund their social programs and governments. They need a price that puts them in the black and the rest of the world will pay. If it was a free market the fracking boom would still be raging and oil would be $30/bbl. Many gulf nations would fall apart if oil was at that price for a long period of time hence the price manipulation. (I'm not sure how they got the frackers to ease up, some say many of the frackers were bought out by OPEC members and their wells capped but that's just conspiracy afaik)
> The goal of the cartel was to stabilize prices right in the sweet spot to keep the world addicted.
If the price of oil remains low the gulf governments can't fund their social programs and risk instability. That may not be the only reason for OPEC but it's a major one.
When fracking really took off the writing was on the wall and I think many OPEC nations have since taken serious measures to shield themselves from price drops. This is probably why the UAE can now feasibly leave OPEC. I thought the fracking boom was the end of OPEC but they managed to hang on.
The prices would go down too much, and then infrastructure would rot as production slows down. Then, prices would skyrocket, and so on.
Oil production and distribution is basically infrastructure, like energy or internet. It can't really follow free market dynamics without eating itself.
A healthy cartel means consistent oil prices. Without it, oil may average cheaper over the long term (and almost certainly over the short term), but there will be a lot more variance.
I guess the silver lining from this mess is that maybe some
more governments realize they don’t want their energy policy to force them into a recession every time there’s a conflict in the Middle East
> Solar, wind, geothermal, hydro, nuclear. These are more than ripe to disrupt energy into the 21st century.
Yes and we've seen negative electricity price in some EU countries a few days ago: very sunny days but not too warm, perfect for solar panels. Supply surpassing consumption: negative electricity prices.
While we're, supposedly, living through an energy crisis. There may oil shipment issues and there are issues with energy due to the Russia/Ukraine war too but... Many already understood that there were solutions to not be entirely dependent on oil.
Doomsayers are going to argue that "we need electricity during the winter at 6 pm" so a "largely negative electricity on a sunny sunday means nothing" (Belgium, two days ago: hugely negative electricity prices, for example and it's not the only case) but the truth is: we're not anywhere near as dependent on oil as we were during the Yum Kippur war / 1973 oil shock.
And oil is definitely limited in how high it can go for as soon as it goes up, suddenly other energy source make more and more sense economically.
Once again: negative electricity prices two days ago. Let that sink in.
The problem is that grid scale power plants can't just turn on when the sun isn't shining. If the negative prices during the day and positive prices at night lead to energy storage, then it's a solution. Otherwise, it's just a glut at some times of day.
Ok I was initially thinking this would be good for oil prices since they are leaving a cartel, but the article is saying this will just create more uncertainty. Seems we are damned if we do, damned if we don't these days.
> Ok I was initially thinking this would be good for oil prices since they are leaving a cartel, but the article is saying this will just create more uncertainty.
Where does the article say that? It says this is expected to lower the price of oil.
It also says that, because the price of oil is currently unstable, the impact will be difficult to see:
> Mazrouei said the move, in which the UAE will also leave the OPEC+ grouping, would not have a huge impact on the market because of the situation in the strait.
But it doesn't say anywhere that there's uncertainty over in which direction this moves the price of oil. The uncertainty is over what the price of oil will be.
Since covid, either way and whatever the event is, it will always be used to increase the prices on consumer’s goods: war, tweets, a giraffe died in Nairobi, it doesn’t matter, prices will go up and never down! It won’t stop unless people, the normal average people, go out in streets rioting against that.
"Oil" is not a homogeneous thing. There are different grades of oil and refineries are built to process specific grades of oil. UAE produces the so-called "Dubai Crude" oil grade, which is very sought after.
It could be the first domino. They do have a port on the Gulf of Oman fed by a pipeline from their major fields well inland. This may turn out to be minimal for the world, but it could be huge for the UAE and their major customers.
The world will never run out oil supply, demand will likely go first.
There are dozens of ways to increase production through world peace, better drilling technology and ideological conversion. Most of African production is well below geological potential (Libya being the easiest example, but also applies to Nigeria and the DRC etc). European shale is barely investigated, Russia is restricted by sanctions, the Middle East by war. Antartica and the Falklands are relatively unexplored but feasible.
However, the electrification of transport will erode demand in everything besides heavy shipping and jet fuel. Without that demand oil prices will crater.
> The world will never run out oil supply, demand will likely go first.
Not sure I buy that. Oil will still be in demand as a chemical feedstock. In fact, there are already people saying that oil is too precious to use as a fuel.
Oil will only be in demand as a chemical feedstock as long as it's economically competitive with the alternatives. There's a substitute for virtually every petrochemical process if oil becomes scare (or expensive) enough.
Substitution is highly impractical in the short term but in a conversations of decades/centuries it's significant. Venezuela's reserves alone could run the world's petrochemicals for 60 years (Gemini) so it's a realistic perspective. Together with other proven reserves we could be okay for centuries.
Some oil fields also produce Helium. That's actually an element we don't have plenty of anyway. But most don't do that, the toxic black goop they're producing is almost all just a mess of Hydrogen + Carbon chains. Similarly "Natural gas" ie Methane is just CH4.
If we have plenty of energy anyway we can just make exactly what we need, no need to drill for a mix of pot luck hydrocarbons. If we don't have enough energy anyway then we're burning hydrocarbons to get energy and we might as well use them as a feedstock too.
The prediction has been "by around 2050" since forever¹. Any time people find a way to increase reserves, flow rate increases to compensate, and the prediction stays approximately the same.
That's to say, I think you forgot to update your number when time passed.
1 - time started at the 1970s, that's a well known fact
> The UAE's exit from OPEC represents a win for U.S. President Donald Trump, who in a 2018 address to the U.N. General Assembly accused the organisation of "ripping off the rest of the world" by inflating oil prices.
I can't see how it is actually a win for Trump. OPEC has mostly been a big partner with the US. They are the ones that have mandated using the dollar as the baseline currency for buying and selling OPEC oil.
The UAE's exit almost certainly signals they are planning on selling oil in other currencies (probably the Chinese yuan). It's also a sign of the UAE wanting out of the partnership it's enjoyed with the US and it's allies.
> OPEC has mostly been a big partner with the US. They are the ones that have mandated using the dollar as the baseline currency for buying and selling OPEC oil.
Has anyone ever quantified the benefit the U.S. supposedly gets from dollar denominated oil? How does that compare to the cost to the U.S. of paying cartel pricing for oil? Given that the U.S. is a huge oil consumer, surely the cost to it of cartel pricing in oil is huge.
In fairness to the UAE, of all the nations of the world, they're the ones who have lost the most economically speaking in the current unpleasantness.
It's kind of unfair.
If they can recoup some of those losses selling outside the system in Chinese currency, (or even in US currency), I have to imagine that would provide some ameliorative relief. It won't make them whole. They've got a lot of problems right now. But I mean, at least it starts them filling back in the giant hole that everyone else dug for them.
Of all the nations of the world, the one that has lost the most (at least in the short term) is clearly Iran.
On the other hand, from the longer term point of view, it looks like big part of the business model of UAE/Dubai (a safe, luxury place for rich) has been shattered and I don't see it coming back.
In the short term, they might want extra revenue, but in the long term, creating extra tensions with their neighbour can't be good.
> I can't see how it is actually a win for Trump. OPEC has mostly been a big partner with the US.
I mean, I don’t even know if I mean this sarcastically anymore, but are we sure that Trump and the US’ interests are aligned? I think something can be a win for Trump and a loss for the USA.
I believe it to be possible to vote for someone and also not be 100% aligned with every outcome they bring about.
In fact, it may even be possible for this to be more in line with the vision of people who did not vote for Trump than the people who voted for him.
If you look at presidents historically, there are some occasions where the vision they described during the campaign to get votes is not in fact the vision they bring about while governing.
Also - what is your presumption of what my vision of the USA might be?
Nobody wanted a war in Iran, recall how Trump wasnt going to start any new wars? We are in this conflict bc of Zionists - it had nothing to do with US interests at all.
To anyone wondering, yes this is a consequence of the War in Iran but what this means isn't exactly clear. Or rather the consequences aren't clear.
For a super brief background, the US has what's been called an oil-for-security deal with Saudi Arabia since 1945. The US supports the Saudi royal family and Saudi Arabia keeps the oil flowing, which has largely been the case (other than 1973). Saudi Arabia remains the "big dog" in OPEC. OPEC+ is really about Russia even though it also includes Kazakhstan and Mexico. Russia became a major oil producer and exporter in the last 20-30 years.
OPEC generally likes stability in oil prices. How it works now is that every 3 months they meet and figure out what the demand for oil will be and adjust production based on that projection to maintain both a price floor and a price ceiling. Prior to this conflict that range was $70-80. Each member gets a share of that production. OPEC hasn't always been successful in policing member countries who have at times exceeded their production targets and also lied about production cuts.
Gulf countries now are utterly dependent on US arms to maintain their (typically unpoular) despotic regimes (usually monarchies). The UAE is particularly belligerent here. I view Dubai as a cleaner, shinier Mos Eisley. The UAE is directly responsible for the genocide in South Sudan. US arms are diverted to the RSF in exchange for illegally smuggled gold to Duabi that gets laundered via Switzerland [1]. Dubai is a terrible place.
Beyond Russia's rise as a major energy exporter, the US also became one in the last 15 years, particularly in 2015 when the export ban was lifted on crude oil (which had been there since the 1973 oil shock). OPEC countries are generally unhappy about this development because every barrel the US exports tends to be 1 barrel OPEN doesn't. But they're also largely powerless to do anything about it.
The Iran War is a massive strategic blunder by the US because it's shown the US has been unable to stop Iran from closing the Strait of Hormuz despite spending $1T+ a eyar on its military but, just as bad, it's shown that the US cannot or will not defend GCC countries or even its own bases in those countries from Iranian counterattacks.
Foreign countries generally pay for US bases as part of a broader security agreement and the idea of joint responsibility for security guarantees. But what if those guarantees are essentially worthless? This will completely reshape the US relationships with GCC countries. The UAE is really just the first domino to fall.
Short-term this smells like the US is either behind this break or at least approves of it. The idea is probably for the UAE to increase production in an effort to stabilize oil prices. This administration has also shown a complete disregard for historic alliances (including NATO) and they probably view OPEC as a cartel they want to break up. But I think this will long-term further destabilize the region and I wouldn't be surprised if some of these governments end up falling or at least break security ties with the US.
If anything, GCC countries will likely see China as a more reliable and stable trading and security partner as a result of all this.
> Short-term this smells like the US is either behind this break or at least approves of it. The idea is probably for the UAE to increase production in an effort to stabilize oil prices. This administration has also shown a complete disregard for historic alliances (including NATO) and they probably view OPEC as a cartel they want to break up.
I've seen reporting over the past week or so regarding the US potentially bailing out the UAE to make up for the financial harm and damage it's suffered due to the US-Iran war. How likely do you think it is that the UAE leaving OPEC is a condition for that financial assistance?
I believe that this administration more than any other post-WW2 administration either has a complete disregard for alliances or is actively seeking to shatter them even though most of them were designed by the US for US interests (eg NATO).
So yes, I can see this admin seeing OPEC as a cartel that is against US interests even though OPEC actually stabilizes global oil prices, actively. I also believe it's highly likely that the US wants to crash the global oil market when the Strait eventually reopens ahead of the midterms.
I too have seen the reports of a potential US UAE bailout and that could be leverage here. It's too early to say. It'll take time to realize the consequences of this deal and understand what led up to it and what the real goals are.
The whole war goes beyond miscalculation. It's the worst strategic blunder in US history (IMHO) and it's not even close. In 1973, the worst impacts happened 6 months after the blockade started. Well, guess what's in 6 months? The midterms. Iran is acutely aware of the US domestic politics of this. Iran also knows this is their best possible chance to end economic sanctions. Iran is more prepared to wait this out. Their goal really is to make the cost of this war so high that the US will never again think about repeating it.
The UAE has some facilities to export on the outside of the Gulf and they can ship I believe ~1.8Mbpd on the ADCOP (Abu Dhabi Cross Oil Pipeline). That's only a fraction of their 4-5Mbpd production and I'm sure they're already using it so short-term I don't think it matters so much.
But when the Strait does open, which will happen eventually, the UAE will probably go to town so to speak, exporting well above what they might've otherwise as an OPEC member.
My suspicion is that this is what the UAE's move is really about and whY I think the US is giving at least tacit approval if they're not outright behind it.
Iran lets oil traded in Yuan to navigate the Strait. OPEC sets prices in Petrodollars. What is the point of staying in OPEC then? Qatar is not part of OPEC so they were able to trade freely in Yuan.
Leaving OPEC right now means little short-term with so much production shut-in. Long-term, the UAE may cease to exist if this war goes on. Its population is 80%+ guest workers, it's totally dependent on desalination, food imports, and oil/gas exports and is incapable of defending itself on its own.
(1) “The United Arab Emirates,” today “made a shock request of [Pakistan] — repay $3.5bn immediately” [1].
(2) Saudi-Emirati relations were at an all-time low before the Iran War [2]. (Saudi Arabia just bailed Pakistan out of its Emirati loan. Saudi Arabia and Pakistan agreed a mutual-defence treaty last year [3].)
Put together, we’re seeing an Emirati-Israeli axis emerging to balance Saudi hegemony in the Gulf and Iranian hegemony over the Persian Gulf. I’d expect to see an Emirati deal with Egypt and India next if this hypothesis is correct.
What I don’t yet see is the ambition of the endgame. Is it Saudi Arabia backing off in Africa? Or is it seizing the Musandam Peninsula, islands of the Strait and possibly even territory on the other side?
[1] https://www.ft.com/content/99073d6e-4b57-417f-88fb-7a2c0e55e...
[2] https://www.nytimes.com/2025/12/30/world/middleeast/yemen-sa...
[3] https://en.wikipedia.org/wiki/Strategic_Mutual_Defence_Agree...
"Israel sent "Iron Dome" system and troops to UAE" - https://www.axios.com/2026/04/26/israel-iron-dome-uae
Also...their central bank governor quietly asked the US Treasury for a dollar swap line...Combined with the Pakistan $3.5B recall and OPEC exit, that is three coordinated moves of a cashflow stressed country...and of course the US is being asked to extend taxpayer backed dollar credit to the same royal family that bought 49% of Trump's crypto company four days before inauguration...
https://fortune.com/2026/04/19/uae-talks-us-possible-financi...
The issue is those liquid assets are US Treasuries and US public market equities (mag7 etc.).
They don't really want to sell them, and they also know that the US really doesn't want them to sell them - the last thing Trump wants heading into the midterms is an S&P500 bear market and 10y treasuries heading back to 5+%.
So they ask for a swap line and they're negotiating from a position of strength, the US doesn't have much of a choice but to give them as much as they need and damn the consequences
RealLifeLore has been doing a decent job covering it [1].
The broad summary is you have the Saudi-backed unity government, the Iranian-backed Houthis, who claim all of Yemen but practically want North Yemen, and the UAE-backed STC, who also claim all of Yemen but practically want South Yemen. Emiratis bring the Israelis to the party. The Iranians bring the Russians. The Saudis bring various international elements (I know less about them than the Houthis and STC).
[1] https://m.youtube.com/watch?v=IgD7zmJN3_A&pp=0gcJCVACo7VqN5t...
https://www.youtube.com/watch?v=qsO-rULEfrk
Kind of depressing thought actually.
I gotchu: https://youtu.be/-evIyrrjTTY ("This Land is Mine", 3 min)
[0]: https://www.slate.com/blogs/the_world_/2014/07/17/the_middle...
Thank goodness our predecessors didn't think this way. They thought that through reason, hard word, and humanism they could overcome these things, and they did. No doubt there were plenty of naysayers.
What will we do with our turn?
This part of the planet has been almost intractable since the age of Hammurabi - it is quite fractured without any current overarching unity or framework. There isn't a dominant religion (similar to Europe) or shared values. I could say almost meaningless things like "thought that through reason, hard word, and humanism they could overcome these things" which would make little of the hard truths of the long histories of the varied peoples and fractions of the area.
It would almost seem naive to say things like because we've solved some tough problems in the last century we can solve all problems.
I think you gloss over much and certainly give yourself a mightier than thou feeling with your "Thank goodness our predecessors didn't think this way".
I too hope for peaceful resolution and stability but fall back to the historic record of success especially in a place that is constantly, recently and historically decimated by war among fiefdoms.
In fact it was wars with a strong religious element between Protestant and catholic factions that tore Europe apart for centuries afterwards
The reason is fractured is because of the inherent tribalism within the cultures of the region. Strip away the tribalism (Oman, Qatar, UAE to an extent), concentrate the people near a few cities (Egypt), or provide them a unifying overarching culture (Iran, Turkey), and you get some success. In fact, the early Islamic empires were heavily mired in infighting even though they were "unified" under the Caliphate, in spite of the Prophet's calls for the "Ummah" (One Islamic Nation). I would even argue that Islam's biggest contribution to the region was in providing a specific administrative framework with which to shed the tribal infighting and unite culturally similar but disparate peoples together. It's also why Israel succeeded as a nation with its European flavor of nation-state identity.
An Israeli intelligence officer perhaps correctly attributed it to the past culture of water scarcity and needing to protect your water sources. That is, in the desert, there are only so many sources of water, and if someone steals it away from you, you simply die. So that created a culture of inherent suspicion of outsiders and people outside the clan, even though they all share the same customs and culture.
I guess Al-Qaeda and Isis are also there.
"I and my brother against my cousin, and I and my cousin against the stranger."
https://www.state.gov/releases/office-of-the-legal-adviser/2...
It's funnier than that. The justification is "self-defense of its [the USA's] Israeli ally".
[Ω] https://en.wikipedia.org/wiki/Pakistan_and_weapons_of_mass_d...
So there's that.
They bank rolled Pakistan's not party to the treaty? Sorry I can't parse this sentence.
Did you munge two sentences i.e. Saudi Arabia bankrolled Pakistan's nuclear weapons, and also Pakistan is not party to the treaty?
I added quotes, it should say that Pakistan's weapons program is one that is outside the Nuclear Non-Proliferation Treaty as Pakistan is not a party to it.
Its a pakistani submarine, with exclusive saudi-royalty members on the bridge.
We should build a city that is a statistical bunker- basically a line, for the edge case of jihadist insurgents getting the forbidden eggs in the cake.
Don't Egypt and Israel hate each other though? Could UAE feasibly align with both?
So yes, the UAE could align with both.
It’s actually surprising it’s achievable for so long but in the long term doesn’t feel stable given the direction things are headed
Yeah, we tried "separate but equal" here too.
> On the other hand, does Hamas recognise a Jewish marriage?
Being the good guys is about more than being "second worst".
> Being the good guys is about more than being "second worst".
If you cannot think about any group that’s not as bad as Hamas, but worse than Israel, I‘m happy to help… just ask!
A decent number of Israeli Jews have to do that as well, since Israel recognizes Jewish marriages only under orthodox rabbis. Some Israeli Jews are not even considered Jews under strict orthodox rules.
They don't have to if they are one of the approved religions. That's a restriction on religious freedom.
> since Israel recognizes Jewish marriages only under orthodox rabbis
I don't get how is this evidence of religious freedom.
> The law imposes the death penalty on persons convicted of fatal terrorist attacks. In military courts, the death penalty is the "default"; only Palestinians are tried. In civilian courts, both Israelis and Palestinians are tried, but the law applies only to those who "'intentionally cause the death of a person with the aim of denying the existence of the State of Israel'—a definition designed to exclude Jewish terrorists". It therefore "effectively enshrines capital punishment for Palestinians alone".
And to preempt the "but that's Palestinians, not Israeli Arabs" bit, nope:
https://en.wikipedia.org/wiki/Terms_for_Palestinian_citizens...
https://en.wikipedia.org/wiki/Arab_citizens_of_Israel lists all sorts of other smaller inequities:
> In 2005, the Follow-Up Committee for Arab Education said that the Israeli government spent an average of $192 a year on Arab students compared to $1,100 for Jewish students.
> In the 2002 budget, Israel's health ministry allocated Arab communities less than 1% of its 277 m-shekel (£35m) budget (1.6 m shekels {£200,000}) to develop healthcare facilities.
Nevertheless, you should always ask yourselves: would you prefer being an gay Arab in Tel Aviv or a gay Jew in Gaza?
https://en.wikipedia.org/wiki/Rafah_Border_Crossing
> The Rafah crossing was opened by Israel after the 1979 peace treaty and remained under Israeli control until 2005...
> Under a 2007 agreement between Egypt and Israel, Egypt controls the crossing but imports through the Rafah crossing require Israeli approval.
Egypt said 'HELL NO', first, because they don't want to deal with Palestinians (both political and economic nightmare), and second because it would have been viewed as ceding to Israelis and helping them cleanse Gaza, which would be highly unpopular among their population.
Yeah, that's not "wide open". Israel would absolutely be happy with a one-way exit gate.
Bottom line, Egyptians are not interested in supporting millions of refugees inside their border. So the border stays closed to mass immigration.
Also true: If Egypt opened the border and Israel objected, Israel would take swift military action.
But NONE of the Arab countries want to help Gaza people really.
This is directly contradicted by Israel's actions in the Gaza War. Egyptian control of the crossing was not enough, so they took it. https://www.bloomberg.com/news/articles/2024-05-07/israel-ra...
thats not something israel would be excited about
The Palestinians didn't help their cause with Yasser Arafat's Black September uprising in Jordan. Then they topped that up with strong support for Saddam when he invaded Kuwait. Like the ones in Kuwait were literally betraying Kuwaitis to the Iraqi troops.
Oh, and did I forget Lebanon? They literally fomented the civil war.
I strongly suspect the average American has absolutely zero sense of how much foreign aid we give Egypt. That's not to contradict your point directly, just that it isn't a very salient part of American politics (unlike Israeli foreign aid).
I feel like Israeli aid, while vastly more salient than it used to be, is still mostly salient as a left-of-center wedge issue, otherwise being about as salient as your average major foreign policy issue - ranking just under the least salient domestic policy issue, which ranks just under the most minor personal quality of any candidate, which ranks under the current state of the economy, which ranks under the current perceived state of the economy. Wow, that's way too many times to use "salient" in one sentence.
And for the record, I'm not arguing about how much people should care, just how much they do.
Already aligned with the KSA [0]
> India
Already aligned with the UAE [1]
---
IMO the Pakistan aspect is overstated. This is a reversion to the norm of KSA-Pakistan relations before Imran Khan completely destroyed it by fully aligning behind Qatar and Turkiye when both were competing against KSA.
[0] - https://www.aljazeera.com/news/2026/1/5/egypt-says-it-shares...
[1] - https://thediplomat.com/2026/01/india-uae-embark-on-a-strate...
It’s complicated [1]. My low-key guess is cutting off Pakistan was intended to send a message to Cairo.
> Already aligned with the UAE
Aligning. To my understanding there isn’t a treaty yet.
> the Pakistan aspect is overstated
Pakistan isn’t the cause. It’s the canary. These moves happening in quick succession (strategically, over the last year, and tactically, in the timing of these announcements) speaks to previous assumptions being fair to be questioned.
[1] https://www.washingtoninstitute.org/policy-analysis/egypts-t...
Abu Dhabi and Cairo have been misaligned for years since the Sudan Civil War began (UAE backs the RSF and KSA+Egypt back the Army) as well as the UAE backing Abiy Ahmed in Ethiopia at the expense of their traditional partner KSA.
> To my understanding there isn’t a treaty yet.
This is as close as it will get. New Delhi doesn't "sign" defense treaties unless pushed to a corner, because it reduces maneuverability.
The Pakistan-KSA alignment was already cooking after IK was overthrown. I think I mentioned it before on HN (need to find the post I wrote) but given the primacy Pakistan has had in US-Iran negotiations well before the war as well the PRC's increasingly miffed attitude at Pakistan following the CPEC attacks, the US most likely brokered a back-room realignment between PK and KSA.
A neutral-to-ambivalent India with a pro-America Pakistan is better for the US than a completely aligned India with a pro-China Pakistan.
TODO: citations
This is the common problem for cartels: everyone has inventive to cheat on the deals made. By selling a little more than your share you get more money, while because everyone else is following along the prices are higher. (see also prisoners dilemma)
As long as fossil fuels remain one of the cheapest easiest to scale ways to make power, there’s a similar incentive to cheat. If everyone else cuts emissions and you don’t, your margins are higher and you can undercut them. Global reductions require an all-cooperate scenario.
Developing nations have the strongest incentive to cheat since they need those margins to catch up.
Which is why I think little progress will be made until other sources are actually cheaper. Until then it’s beyond us politically. We can’t get all nations across the world to simultaneously cooperate at that scale.
Furthermore, it also reduces the drain on the (often very fragile, for thirld world countries) foreign reserves, especially relevant when the oil prices fluctuate wildly.
If your solar panels are old and you don't have money to replace them, you get slightly less electricity. If you are out of gasoline/diesel and you have no money to buy it, you have a big, big, problem.
Unless there is some hidden cybersecurity risk of them shutting off panels remotely?
And corruption is one of those annoying problems that dont go away easy
IMO economics always wins. You're never going to see an all-cooperate scenario.
You will see an all-compete scenario, so constantly reducing costs for alternatives is key but you also have to find a way to ensure that the producers can win economically too. This is the conundrum.
If solar panels get cheap enough to create high demand, then that demand has to carry through the process of manufacturing, installing and maintenance. Every time I read that solar has gotten even cheaper, I start calling for quotes to install them at my house and the prices are borderline obscene. Same for geothermal last time I needed to update my HVAC.
I want solar and geothermal to work but the economics are a challenge.
All this to say, you calling a local company and getting quotes captures your price but that’s not quite the same as the global price.
https://esgnews.com/us-imposes-solar-tariffs-up-to-123-on-im...
EDIT: I was wrong - tariffs on eg Chinese made solar panels are more like 65% right now - there’s multiple tariffs. https://pv-magazine-usa.com/2025/02/04/u-s-raises-solar-poly...
Point being the US government is making them expensive for US consumers but that’s not true for global markets where they want to have energy independence. Solar is in fact very cheap these days.
A plug in solar panel and microinverter at the local supermarket is about €1k/kW. 9kW of solar for €9k/£8k/$10.5k to power an average US car and an average US house.
Avearge US car does 13,000 miles a year needs about 4,500kWh, so €4500
An average US home uses 11kWh a day, or 4,000 kWh a year, that would be another €4000
US electric price is an average 17c per kWh. That's a 15% ROI.
I suspect the costs your quoting are mainly things like scaffolding and labour, and that's not going to get cheaper.
The panels themselves - ignoring inverter, install, etc, are $100 for a 400W panel [0]. To generate a whopping 16,000kWh a year -- 70% more than the average -- you'd need to spend $4k on panels. Even if panels were free, your quotes would still be obscene because tradesmen charge obscene amounts (or rather roofing work is just expensive)
[0] https://www.solartradesales.co.uk/aiko-neostar-2s-460w-n-typ...
https://www.eia.gov/energyexplained/use-of-energy/electricit...
Typo, 1000kWh from 1kW of solar panel.
I got my 4x 455W panels for 70€ each from BayWa (random vendor in Germany), plus delivery. Microinverter ~200€. Aluminium etc for installation ~400€ or so. I installed them together with a friend. Total cost ~900€ or so. At 30ct/kWh in Germany, break even is in 3 years. Would be earlier if I had a better roof to put them on, mine has some shadow.
It's political will not economics that keeps us addicted to fossil fuels. Nobody gets rich from solar panels. You build them. They produce power. Oil wells like any mine are huge wealth concentrators. That's the real problem.
If anything, a bunch of countries (particularly those who are net oil importers) are re-evaluting their energy dependence given that the compact that the US will guarantee maritime transport has essentially been broken.
[1]: https://www.iea.org/reports/projected-costs-of-generating-el...
In March 2020 at the start of the pandemic, it looked like the world economy would come to a standstill. Oil futures went into extreme contango, briefly going negative as nobody was taking delivery. So in April 2020 the Trump administration went and browbeat all the OPEC+ members to massively slash production [1][2][3]. Art of the deal. This culminated in a 2 year deal to cut production by initially 9.7Mbpd (million barrels per day) and then reducing over the 2 year period [4]. This was a disaster.
For context, OPEC does this sort of thing by themselves without any kind of prompting when necessary. They meet every 3 months and project demand and then set production targets to maintain a floor and ceiling for oil prices. Individual members can and do cheat, producing more than their allocation and lying about production cuts but all in all the system mostly works.
Trump loses the election. Biden comes in and demand rockets back in 2021 and crude oil prices skyrocket, as do gas prices as a result. The Biden admin quietly went to MBS to ask him to end the deal. He refused. You can overlay this 2 year deal with global inflation and it pretty much matches up exactly.
So Republicans blamed inflation on Biden even though it was a Trump deal. The Democrats didn't abandon US foreign policy and publicly hang out an ally to dry so instead just blamed greedy oil companies for price gouging. And nobody at all mentioned the 2020 OPEC deal. Not in mainstream politics anyway.
That was a 10% cut in global supply and look what it did to inflation. Closing the Strait cuts global supply by 20%. In 1973 with the Arab oil embargo, the major recessionary effects took 6 months to really hit. This is a ticking time bomb that will likely explode leading into the midterms.
Anyway, the point is OPEC+ did that.
[1]: https://www.reuters.com/article/economy/special-report-trump...
[2]: https://www.reuters.com/article/business/opec-russia-approve...
[3]: https://www.reuters.com/business/energy/opec-would-miss-frie...
[4]: https://www.reuters.com/article/us-global-oil-saudi-cuts-idU...
[4]:
So if the other side overpumped by x1 amount then you pump an extra x1 the next turn / year (maybe multiplied some reference production factor as they don't all have the same absolute limits).
The real world is much more complex. OPEC is a multi-party game, for starters. For another thing, there are cascades of social/political problems that get in the way of optimal strategy at the level of nations. I.e. that only works if politicians are more interested in solving problems than controlling narratives or maintaining power. Unfortunately, an ineffective leader can be sustained by controlling the narrative, while an effective leader can be destroyed by lack of control over the narrative. And one of the best ways to control a narrative (especially if you aren't a very good leader to begin with) is to create so much chaos that it distracts from your shortcomings, and blame the chaos on enemies.
There are current Land Rovers with market positioning suggesting they're "better" than Mercedes, and there are historic Land Rovers which were arguably not much better than camels.
Camels are cool still.
So U.S. equities will be sold for pennies?
Are you predicting a U.S. stock market crash bigger than the Great Depression, when oil runs out?
Could be a sell off if it isn't managed...measured buy-backs scaled over a timeline that maybe offers them an opportunity to invest in other commodities may be preferable.
Actually now that I think about it...I should probably keep a pulse on ME holdings about 2 or so decades from now
However just because they are trying doesn't mean they will succeed. Their attempts at diversification still seem very reliant on oil money, and its far from clear that they will eventually be able to stand on their own.
Of course who knows how to end of oil will happen. Best case is a switch to renewables (or fission...) in which case there will be more than enough expensive oil for a few rich people to drive expensive gas cars if they want to. There are lots of other options as well, only time will tell.
(and a nod here to the replies who suggest this was never actually said)
This is an initial but big crack in shaking up global oil markets in a way that meaningfully shifts global power dynamics.
Legislation isn't going to work. Economics isn't going to work. War - which cuts off the flow of petroleum because nobody is willing to risk their life for oil - will work very quickly. Nothing quite like a shortage to spur innovation.
We’re rolling back CAFE standards too.
CAFE is a great example of a well-meaning regulation failing because the people who developed and approved it didn’t think through the obvious consequences.
Allowing light trucks to turn the SUVs and replace sedans is not an "unintended consequence"--it's either stupidity or graft (not xor).
There are several laws that are "wtf -- is this the best we can do?"
Separately I've heard emissions laws blamed for large sedans losing to small SUVs and trucks due to double standards, but I doubt it would've made a difference, even though I personally prefer large sedans.
We aren't mindless zombies buying whatever we see on TV. I'm old enough to remember when Japanese small cars practically took over the market in the 70s and 80s due to gas price shocks. It can happen again.
I just bought a (small, hybrid) truck because I need to do some truck stuff. I 100% would have bought an electric if the market produced one with comparable capability and competitive price, but we're not there yet, and I don't have Rivian money (yet! lol maybe someday).
My point being: there is still a huge demand for trucks from both a capability and culture standpoint, and very little supply of a cost-comparable product that doesn't take gas or diesel. Rivian is around double what most people want to pay, and the F150 Lightning was marketed poorly and had bad towing/hauling range compared to gas/diesel equivalents.
I'm not here to defend "truck culture" but I do believe that if you offer people a better product, they will figure it out and buy it. An electric truck with 400+ miles of towing range, an onboard 2kW+ inverter, 500 ft-lbs of torque, and fast charging for the same price as a comparable gas F150 will sell. Unfortunately the battery energy density and EV supply chain economies of scale aren't there yet in North America.
The problem is those vehicles don’t exist, because the manufacturers only want to build the high margin gas guzzlers.
Look at fuel economy of US made vehicles vs those in Europe. It’s beyond a joke.
But we are. I don't want to turn this into a political slap fight but it became apparent to me the extent in which people are swayed by advertising when I read an article that talked about how one party in the US was concerned that the other was going to win an important seat becase the other party had done a recent spending surge on ads in last few days before election day and they were concerned that they couldn't match it.
That article right there forever changed my view of the average person on the street. In a highly polarized campaign and political environment with months to years of knowing who the candidates and policies are and they can still be swayed by millions in TV and radio ads? Like it sounds like these people could literally be on their way to vote for a candidate and then switch their mind at the last second because they hear an ad on the radio as they're pulling into the polling station.
That's absurd -- but it's real.
People are completely enthralled by advertisements to the point where they'll buy a stupid truck that they can't fit anywhere, that they need a ladder to climb into, that has terrible sight lines, simply because advertising tells them to.
Advertised products will sell more, but only to a certain point. No automaker can get away with marketing a 20mpg non-luxury sedan or compact no matter how much they advertise it. People are buying inefficient autos because it's something else they really want, be it a luxury car or an SUV or a truck.
(I would support a Constitutional amendment to restrict campaign contributions and effectively overturn the Citizens United v. FEC decision.)
It sounds to me like you're confusing the magnitude of advertising spending with effectiveness of advertising techniques.
Some people have found more effective ways to advertise to people, we know all this, it isn't uncharted conversation territory. We all know about micro-targetting based on personalized data, dominating certain niche mediums like AM radio to target people when they're driving and coordinated pushes with people in industry.
The point is that advertising works. It works disconcertingly well.
This is why people buy stupidly impractical automobiles that they don't need.
They seem like mutually exclusive claims, to me. Am I missing something?
Taxes. Social Security.
The list is gigantic. Your claim could not be more false.
Larger vehicles are more comfortable, safe, and practical (for anyone who doesn't need to worry about parking issues). It doesn't take advertising to convince consumers about that, it's just reality.
Ditto with the Sentra and the Versa.
This is my point exactly.
The profit margins on larger trucks are higher precisely because that's what consumers want. No one is forcing them to buy those vehicles.
https://www.iihs.org/ratings/driver-death-rates-by-make-and-...
I'm pretty sure it's not, because physics. A tank is safer than a bike for the poilot, when there is a collision. This data is a little muddled, but follows common sense.
Large SUVs and Pickups: These vehicles have the lowest occupant fatality rates, averaging 14 deaths per million registered vehicles for SUVs compared to 48 per million for sedans. Large luxury SUVs often register statistically zero deaths in specific three-year studies.
Tall grilles are a purely aesthetic choice. We could create safety standards for pedestrian impacts and end this inane trend. And still drive trucks!
America is already fucked, given how awful its urban sprawl is. Trucks used for commuting and not haulage just makes it double fucked.
It was not an oversight. It was corruption.
I am familiar with the EU situation. The carbon tax you would have needed to achieve the effect of fleet emission standards would have been political suicide.
And that is not just psychological. People who buy used cars and drive their cars until they fall apart are well correlated with people who can't afford high carbon tax. Buyers of new cars are the people who can. Carbon Tax would mean massive redistribution of the money raised. Yet another political mine field.
There's a trend toward advantaging entrenched interests to the detriment of the overall economy and interests of the population.
A 2025 study showing that it did.
The last refinery to be built in the US opened in the 1970s. Since then, refineries have closed. None of the owners of refineries will sell them because of SuperFund legislation. It is the same reason that when a gas station is sold, the fuel tanks are dug up and replaced. This way, there's no way to claim that the previous owner left hazardous material to be cleaned up. SuperFund laws say that every previous owner is liable for the cost of cleanup. It doesn't matter how long ago the property was sold.
So yes the US could limit or ban exports. Many countries (including China) have done this in a kind of energy nationalism, but that hangs out allies to dry in a way that would make the US deeply uncomfortable. It would threaten European energy security. It would come at the cost of Latin American exports. So there's a cost to pay.
And more to the point, no US government regardless of party is going to hurt corporate profits by limiting exports. Biden could've done it in 2021-2022 and didn't. And Trump certainly won't. As one example, a big release from the SPR was on an oil-for-oil basis. Rather than cash ii on high prices, it's just a massive gift to oil companies who have to repay the oil (and then some) at some unspecified future point when oil will be cheaper. That's billions the US could've added to government coffers.
I do agree there is a power shift going on but not because of US energy independence. No, it's because the US cannot militarily protect GCC countries and cannot force open the Strait of Hormuz or guarantee global shipping, which has essentially been a US guarantee since 1945.
I do think this administration does want to crack OPEC but that's likely to be of massive benefit to China without China having to do anything.
In short, the US cannot functionally be independent on fossil fuels even if we extracted every drop of oil within our borders--because we literally cannot use all of it, and most of it would be wasted just sitting around.
Yes, we would need to build more refining capacity to use it all effectively, but in a cataclysmic event (i.e. a world war or something) the US would be much much better off than most other countries.
Europe, or China, or India could not though.
India has geography for solar, and the human/industrial capability for nuclear.
Southern Europe can go solar as well.
Northern Europe has it tougher (except Norway, with its abundant hydro). Nuclear could work. Or long range DC cables from South Europe or North Africa (if ever Europe helps them to put their act together - not easy or fast, but definitely in their best interest).
[1] https://en.wikipedia.org/wiki/Spain-Morocco_interconnection
Central and Eastern Europe have it tougher.
If foreign oil supply were cut from China or India, they'd be in a much bigger trouble.
Economic: it weakens OPEC’s pricing power in a way you might not see right away if Hormuz is closed, but it could really change the supply picture once things reopen
That is just UAE pressure to make sure they get their dollar swap deal: https://www.reuters.com/world/middle-east/trump-says-currenc...
The Saudis did it to Biden in 2023, the UAE sees the opportunity to do it to Trump now.
What happened this week - they announced they might start selling in yuan, they left the OPEC, and they started a new wealth fund to invest exclusively in China. That gives them an alternative for the dollar-peg since China is their biggest import partner anyways, while also giving their surplus yuan an alternative channel of investment into China.
Still they need the dollar-swap for the essentials - food from India and Pakistan, neither of which will accept their dirhams unless they get exclusive deals (which are not allowed in OPEC). It helps for them that India and Pakistan need lots of oil, and that a dollar peg benefits the UAE more than it does either nation. If the EU plays a greater role in trade, particularly in defence and maritime manufacturing, they will stockpile euros too, to the detriment of the dollar.
Still, they also bought some prime DC acreage to expand their US diplomatic corps, and will likely keep the Washington connection, so long as AI is perceived as useful. Right now, that's the only major export benefit the US provides the Gulf countries. This is them just hedging their bets.
The Yuan is the current bogeyman the Gulf States use when they want attention from the US (not that they’re not diversifying, just that it isn’t a structural shift in a meaningful way). The UAE is making this play right now to make sure they are part of the conversation in deciding how things with Iran end and making sure their influence is sustained after the current administration.
The wealth fund is a way to deploy whatever yuan they receive while gaining political favor with China as well.
OPEC cartel membership didnt gain it access to Hormuz, and the US petrodollar promise to protect UAE states from aggression in exchange for trade in USD could not be upheld.
Well the war is still ongoing, and Iran's regime is already feeling the pain of the blockade [1]. Pricing oil in Yuan because, I guess, the US is somehow not protecting the UAE doesn't make sense because China won't be there to protect them either. The US can just say, well fine you can sell your oil in Yuan. But we'll just blockade the Straight and seize oil priced in Yuan or something. Who exactly does the UAE need protection from? Iran? China's ally?
I swear I read this same story over and over again. There's always just an accusation "thing happened, here's how the US is now in a state of being screwed" and there's just never any follow-up or perhaps imagination that the US could just do something too. Hypersonic missiles? US Navy is done for, no possible counter. Iran has drones? Boom. US is done for no way they can spend Patriot missile money on $30,000 Iranian drones. Nope, nothing anyone can do at all. Iran "closes the Straight", well the US can't do anything. Now they are "embarrassed" and "slammed".
> OPEC cartel membership didnt gain it access to Hormuz
What does this mean?
[1] https://www.wsj.com/world/middle-east/iran-is-flooded-with-s...
It is an admission that US protection was always a paper tiger. Perhaps in the 1960s it meant something, but Iran has shattered the illusion that Washington has any credible defense of the country.
> The US can just say, well fine you can sell your oil in Yuan. But we'll just blockade the Straight and seize oil priced in Yuan or something.
The UAE primarily sells its oil to China, which is its largest export partner, followed by countries like India and Japan. the United States cannot do this without not only obliterating energy markets for an ally, but strengthening alliances between china and india. It is likely that should the US attempt such a move, China would respond with retaliatory technology tariffs and a reduction of agricultural trade.
> Who exactly does the UAE need protection from? Iran? China's ally?
the UAE did not "need protection" from any regional military threat until the United States used regional peace talks as cover to launch a surprise attack against Iran. the UAE would still likely be an OPEC member state had the US not unilaterally chosen to obliterate global energy markets for no consistent or clearly defined reason.
> there's just never any follow-up or perhaps imagination that the US could just do something too.
This conflict was well defined as geopolitical suicide for nearly forty years; its what kept the peace. All simulations and tabletop exercises predicted such an incursion would send global energy markets into panic, trade markets into recession, and produce no meaningful advancement of either regional security or regime change. Iran is backed by powerful allies and has shown numerous times it can meet each US escalation with yet more regional attacks. We have tried escalation and failed, burned through a decade of advanced missiles fighting cheap drones, and have no defined objective politically or militarily for this conflict.
sigh No, it's not. There are 3 aircraft carriers parked in the region, plus US air bases. Iran launched over 2500 missiles at the UAE alone. The US destroyed much of Iran's military, the only thing they have left is the ability to launch missiles and drones at ships or do terrorist style attacks.
But if you want to suggest that the US is a paper tiger here, that just makes everyone a paper tiger. Nobody can stop Iran. Ok.
> The UAE primarily sells its oil to China, which is its largest export partner, followed by countries like India and Japan. the United States cannot do this without not only obliterating energy markets for an ally, but strengthening alliances between china and india. It is likely that should the US attempt such a move, China would respond with retaliatory technology tariffs and a reduction of agricultural trade.
Then we would react with export controls, additional weapons shipments to allies in the region, work with Japan and South Korea to start weapons programs, blockade Chinese trade, there's a million things we can do too.
> the UAE did not "need protection" from any regional military threat until the United States used regional peace talks as cover to launch a surprise attack against Iran. the UAE would still likely be an OPEC member state had the US not unilaterally chosen to obliterate global energy markets for no consistent or clearly defined reason.
And yet, UAE wants the US in the region and in UAE soil. Iran launched over 2500 missiles at the UAE, including civilian targets. Not sure your comment here reflects reality.
> This conflict was well defined as geopolitical suicide for nearly forty years; its what kept the peace.
Things change. US is the #1 energy producing country in the world in terms of oil, gas, &c. We're less dependent on the Middle East, plus we've basically secured the Venezuelan oil supply. Seems to me that what was once geopolitical suicide is no longer the case. We're here today, and life in the US just goes on as normal.
> All simulations and tabletop exercises predicted such an incursion would send global energy markets into panic, trade markets into recession, and produce no meaningful advancement of either regional security or regime change.
TBD
> Iran is backed by powerful allies and has shown numerous times it can meet each US escalation with yet more regional attacks.
Yes, Iran, who is supplying Russia with drones and such for its war against Ukraine is an ally, as is China.
> We have tried escalation and failed, burned through a decade of advanced missiles fighting cheap drones, and have no defined objective politically or militarily for this conflict.
We have not burned through a decade of advanced missiles fighting cheap drones. We can build our own cheap drones and are working on scaling production, and just because you don't understand the political or military objective doesn't mean that there isn't one, however poorly or well-thought it may be.
The US has very much escalated and sits now at the top of the escalation ladder. Iran has been trying to get the US to the negotiating table due to the blockade. Iran can launch its missiles as it likes to at civilian targets in the Gulf. We + allies will just get better at shooting them down. Who cares? If Iran wants to try to escalate we'll just escalate further, blow up more stuff, keep the oil from flowing if we decide. It doesn't really hurt us much.
Well, Iran closed the Straight and the world is facing biggest oil crises since 90ties. US was in fact incapable to prevent it. Even if the Straight opened today, harm already happened and will continue to happen for months. And I dont think it will open today.
The war did not had to start at all and is causing considerable harm already. Iran feeling pain does not mean surrounding states were protected - instead they were put into harms way.
> Pricing oil in Yuan because, I guess, the US is somehow not protecting the UAE doesn't make sense because China won't be there to protect them either.
At this point, China is more predictable and crucially, more likely to keep their word. Not exactly entirely predictable and not exactly truth teller, but the difference here is huge.
They were always in harm's way. The war could have waited, and Iran could have doubled or tripled its missile stockpile and then they really would have been in harm's way. You're falling in to the same trap I mentioned "country does X, end of analysis".
> Well, Iran closed the Straight and the world is facing biggest oil crises since 90ties. US was in fact incapable to prevent it.
Any country is incapable of preventing it then. Iran could always just mine the straight and threaten to launch missiles and go hide in the mountains. If Iran wasn't doing all of these awful things in the region, none of this would be happening.
The missing ingredient has never been how many missiles Iran has stockpiled, it was external military action from someone like the US that gave them the window to assert that control.
The US didn't do the world any favors by getting it out of the way sooner or something, that's just absurd apoligism for a poorly planned war of choice that has obviously been a net negative for basically the entire world.
It would be like if the US nuked China and then shrugged after they predictably retaliated saying it just proved the threat from their stockpile that had always existed.
Why would they threaten to do so prior to being ready? Have you ever played a strategy game where you build up your forces for an advantageous offensive or defensive position? Countries do this too. If we were playing a game where my actions would provide some advantage or victory over you in some area or a broad area, why would I announce what my intentions were to you so you could react or anticipate my actions?
Separately, you can just ask: why are they even stockpiling missiles in the first place? Why isn't Singapore stockpiling missiles, or perhaps Portugal, or Panama, or Morocco? Of course, this then introduces the circular reasoning "because of a potential US attack", but of course if Iran wasn't funding Hamas, Hezbollah, Houthis, and more, building up these missile stockpiles, continuing to pursue a nuclear bomb, helping Russia with its invasion of Ukraine, we wouldn't be here. At some point you just have to look at their actions and their actions suggest implementing a plan.
> The missing ingredient has never been how many missiles Iran has stockpiled, it was external military action from someone like the US that gave them the window to assert that control.
They don't have control over the Straight of Hormuz. It's a bit of semantics, but control would mean they can allow or disallow ships to pass based on their own decision making. They can disallow ships, but the US can also disallow ships. If Iran controls the Straight of Hormuz because they can fire missiles at ships, the US also controls the Straight of Hormuz because of that very same capability.
This had squat zero with acute danger of military buildup. This happened because Hegseth thought Iran will fold and found it super unfair they did not.
> Separately, you can just ask: why are they even stockpiling missiles in the first place?
To protect themselves when America starta Another war. It cant go without war for long. As brutal as iran is, there was no imminent threat of expansion
It is israel who just displaced millions of people.
Is the idea here that only USA gets to have missiles?
> To protect themselves when America starta Another war.
Yet, only Iran has to protect themselves. Why is that? Well it's because they're doing bad things, and they know that we may do something about it. Why isn't Peru stockpiling missiles, or Thailand, or Iceland? It's because Iran's government was seized by an authoritarian regime that hates America and decided we would be the enemy forever and has continued to attack, and take other violent or non-violent actions that destabilize the region and global trade. If they just stopped doing this stuff, there wouldn't be a reason to "attack".
> It is israel who just displaced millions of people.
I don't think so. But Iran is responsible for Syria and those millions of people too. Like Maduro is responsible for the 8 million + refugees from Venezuela.
Your point of view of the world does not match reality. Stop making excuses and defending brutal authoritarian dictatorships.
> Is the idea here that only USA gets to have missiles?
Well you believe in nuclear non-proliferation, right?
Iran did not mined strait until USA and Israel bombed it twice during negotiations, threatened civilisation destruction, murdered political leaders and attacked BOTH civilian and military infrastructure.
You dont get to start a war or bomb and then blame the other side for not passivele accepting the situation.
USA caused harm here.
Iran threatens to erase Israel and the United States off the map pretty much daily. So I just don't care that Trump did the same back to them. If they don't like threats like that, perhaps they should stop issuing them yea?
> murdered political leaders and attacked BOTH civilian and military infrastructure
What civilian infrastructure was deliberately attacked? We do know that Iran deliberately attacked civilian and military infrastructure. Did you mix the two up?
> You dont get to start a war or bomb and then blame the other side for not passivele accepting the situation.
Who started the war isn't an easy question to answer. I can easily and obviously argue that Iran started the war when they attacked Israel through their proxy forces. Ultimately though who "started" the war doesn't matter that much. Both sides have had grievances for quite a long time and things are just finally coming to more direct conflict.
Adjusted for inflation the price of oil isn't even the highest it's been this decade, let alone historically.
The price tripled from 2003-2008 as well.
>The war did not had to start at all
We probably won't know for twenty years if that's true or not. It's not as Iran's been some peaceful country for the last twenty years, they actively have sponsored terrorist organizations with the purpose of destabilizing the region. The country also sits on a wealth of natural resources but was solely researching nuclear power for peaceful purposes.
Really the big lesson for the next superpower is to simply act earlier. If you don't care about winning and just being a thorn in everyone's side, ballistic missiles are a great investment, and it should have been taken more seriously when Iran started stockpiling thousands of them.
I dont think UAE cares about American oil prices that much. Nor does Europe nor does Asia. That just meand America is less motivated to solve clusterfuck it created.
And yes, it is huge issue already. With flies cancelled for summer, with strategic reserves already being used, with homeschool and home office in some countries, shorted workweek in others, factories producing less.
> We probably won't know for twenty years if that's true or not.
We do know that. There was no urgent reason to start badly prepared war. And no involved country is peaceful.
> The country also sits on a wealth of natural resources but was solely researching nuclear power for peaceful purposes.
It was entirely legal for them, because literally USA teared down agreement to do the opposite.
And what everybody knows now is that the only way to be safe from aggression is to have nuclear.
[1] Not a 2nd Amendment criticism, I’m a strong supporter. More so the folks who load up on ammo and “cool” gear and all that stuff.
defecting from the cartel, a tale as old as time
On the backside I’m sure there will be lots of fun back door deals around all those interceptors and future anti drone technologies. Today though the US has been the impetus of a lot of the current issues.
I have read this headline dozens of times in the previous 30 years.
Kuwait was “saved” by the US. The Iraq invasion was approved by the GCC, partly as payback for Kuwait, and anyways Iraq is not part of the GCC. The Qatar blockade was self-inflicted (and extremely stupid).
Does OPEC limit that? It would be very surprising to me if they did, as the point of opec is only to limit production when oil prices are low. They aren't low right now.
I believe the US has given tacit approval or is behind this move entirely for what comes when the Strait inevitably reopens and that is to get the UAE to export well beyond what they might otherwise as an OPEC member.
The UAE like most GCC countries is entirely dependent on US arms to maintain their regime so I simply cannot imagine them doing this without the US putting them up to it or looking the other way.
Mbpd = thousand barrels per day, MMbpd = million barrels per day
Despite there being way less than 1 successful attack per week [1] travel through the Red Sea is down from ~500/week to ~200/week [2].
[1]: https://en.wikipedia.org/wiki/Houthi_attacks_on_commercial_v...
[2]: https://en.wikipedia.org/wiki/Red_Sea_crisis#Houthi_attacks_...
UAE has a unique yada yada and also ended up with a surprisingly remarkably free economic index despite being a theocratic monarchy.
As did the monarchy Lichtenstein, British controlled Hong Kong, and the one-party state of Singapore (technically democratic, in practice it functions like a recallable monarchy).
Also of note the three richest countries by GDP PPP per capita are Monaco (hybrid monarchy with monarchist veto powers), Lichtenstein (hybrid monarchy with monarchist veto powers), Singapore (single party state).
But let's not play the bullshit and borderline xenophobic, ad-hominem attack that it's just "outsiders" who "just don't understand." Or try and distinguish that it's people 'imposing their worldview' (something every human does no matter what they are arguing).
But don't take my word for it. Read what Lee Kuan Yew had to say himself[0]:
Ah yes, good ol LKY, the outsider who just doesn't understand Singapore, and with such a non-Singaporean 'viewpoint' that he had quite popular support (even if you want to argue it is a minority, it was widespread enough as to be valid enough to be considered one valid and widespread Singaporean point of view). Calling it not a two or multi-party system, leaving quite obviously his assertion is that it's a one-party system.This and other points, documented by Yeo Lay Hwee (Senior Fellow, Singapore Institute of International Affairs) , who even if she flip flops between suggesting Singapore is a one-party state, lists quite a few reasons why it is a reasoned viewpoint from an understood observer [1].
[0] https://eresources.nlb.gov.sg/newspapers/digitised/article/s...
[1] https://library.fes.de/pdf-files/iez/01361007.pdf
Saudi Arabia and the UAE have been urging the US to bomb Iran since 2015 for their own non-oil reasons. They see political Islamism as a strategic and domestic threat. That's why they had Qatar under a blockade for a number of years. Iran is their biggest rival, exporting militancy to Yemen - the Houthis who UAE and Saudi Arabia battled for a number of years last decade. A number of attacks on Saudi and UAE oil and gas facilities from Iran Quds-backed militant groups in Iraq across 2019-2022. None of this makes the news in the West.
This is a battle of economies and regional influence.
Even UAE/saudi backing different groups in Sudan war is rooted in Yemen/brotherhood issue. Both Sudanese groups sent competing troops to fight in Yemen.
> While Saudi Arabia does not have any problems with Islamists and in fact more or less openly supports them, according to Donelli, the UAE sees radical religious groups as a threat to its domestic stability, as well as stability in the wider region. This distinction is also evident in the two countries’ support for the respective sides in Sudan. The UAE supports RSF’s more secular version of Islam, whereas the SAF under al-Burhan’s leadership is widely seen as more or less a continuation of the regime of Omar al-Bashir, which was heavily influenced by the Muslim Brotherhood. https://nai.uu.se/stories-and-events/news/2025-02-07-gulf-st...
They've hired American mercenaries to assassinate Islamist civil society figures in Yemen. They pay European right-wing influencers to spread anti Muslim content (yes you read that right). They are the buyer for conflict gold coming from the Congo. In short they are a problem.
> Legal experts, analysts and local officials warn that the ultimate objective is the “emptying of residential geography”, carving out a depopulated “buffer zone” at the forward edge of the border that permanently prevents displaced residents from returning and establishes a violently enforced demographic reality on the ground.
That's called "ethnic cleansing" when carried out by other countries. Iran will not agree to peace while this is going on. Partly because that's Iranian proxy forces in there among all the civilians getting killed.
If China were to involve its Navy in opening the straight that's exactly what Good outcome could look like
Out of curiousity, what's your good outcome from the Chinese sending destroyers to the gulf?
It is more like the Western nations which cannot withstand another month of all this 'posturing' .. But there is some resilience to the idea that the Iran/Russia/China corridor is going to keep those nations relatively buffered from total disaster.
In 2019 Qatar left OPEC, but nobody cared because oil is less than 10% of their national fossil fuel output, which was about 2% of OPEC's oil output.
Or it is also part of a long term plan of the US to control all energy routes. It will keep Hormuz closed and try a new pipeline via the UAE to the Gulf of Oman.
Fragmentation of the energy producers is another goal. New Alaskan LNG projects have been approved and are all the rage among senators:
https://xcancel.com/alaskalng
A happy coincidence:
"Alaska LNG will deliver vital #EnergySecurity for our military and allies in the Pacific. Thank you @SenDanSullivan for your continued engagement and advocacy."
The US would control the following:
- Baltic sea via pipeline threats.
- Corridor from the Caspian sea from Azerbaijan through Armenia to Turkey.
- Venezuela.
- UAE corridor to the Gulf of Oman.
Probably much more than that. Grabbing the Arctic route via Greenland has failed so far.
They'll diversity into Gold, rare-earth metals (they're only getting more important), CIPS, Yuan, Euro. That diversification helps everyone else, but will hurt the US, which hurts financial markets, and thus everyone else. And once they're all divested, the diversification will add risk and losses. Can't be helped though, they still need security. So we're looking at a generation of slow global decline, probably propped up slightly by the industrialization of AI (which of course China is leading the world in, as nobody cares about "better", they care about "cheaper"). China is the real winner, because all they need is oil, and their partners will make sure they get a steady supply (because it's in their partners' interests; that's what having allies is all about).
US can't stop this; their military isn't equipped to fight wars on multiple fronts, their lumbering, expensive weapons can't be sustained in a protracted conflict, their wars aren't popular at home, and they don't have the manpower. Even when they eventually start the draft back up it'll take years to build up their warfighting capabilities, and by then the world will have diversified enough that they can take the hit. (The US will try a World War anyway to try and retain the Empire, because their leaders are psychotic morons and their people are compliant, but they'll still lose. (Historic parallel: Sparta. Great military, but tiny, so most of their power came from wealth and tenant states; eventually the rest of the mediterranean got tired of their shit (installing dictatorships, alienating allies) and their empire died. Hell, even their Navy was paid for by Persia - foreign investment used to weaken rivals via proxy war))
I don't think this is avoidable. Nobody trusts the US now. The divestment has already begun. Countries aren't suddenly going to change their minds - even if Trump doesn't overthrow the government to cement this new status quo in 2028 (which he 100% will), the next President could be another Trump. Nobody wants to be subject to their insane policies (foreign & fiscal) anymore. So the US isn't a secure place for cash. Nations aren't just going to shrug and ignore it, they're going to act to protect their interests.
>That diversification helps everyone else, but will hurt the US, which hurts financial markets, and thus everyone else.
These are huge jumps in logic, I'm not even sure where to begin. I guess the most glaring question is: If other countries are actively diversifying from US assets as you claim, why would they still be so hurt by a US financial market downturn?
>And once they're all divested, the diversification will add risk and losses.
Since when does diversification ADD risk, and how would losses be incurred?
>which of course China is leading the world in, as nobody cares about "better", they care about "cheaper"
Also a huge claim to make. You'll find plenty of people who want the best models and are pretty price-insensitive, especially among those who get the most economic value out of AI.
The writing is on the wall. It might take decades, but it’ll end.
I expect UAE to send signals that they will increase production considerably once situation allows.
Whenever oil prices surge or 10Y yield touches 4.4% we get some action to contain them.
Unlikely. Out of OPEC’s twelve members [1], one is controlled by Trump, one—the third largest—is bombing the UAE and the other—the absolute largest—is on the other side of every proxy war the Emirates are invested in. As a multi-lateral organization it’s about as fucked as BRICS.
[1] https://en.wikipedia.org/wiki/OPEC
> since the 1980s [OPEC] largely failed to achieve its goals [...]
> members have cheated on 96% of their commitments.
> One large reason for the frequent cheating is that OPEC does not punish members
Let's rewind to March 2020 and the start of the pandemic. For a very brief period, April oil futures went negative. Technically, this was an extreme contango market. Oil producers were running out of places to store oil and nobody was buying.
For some more background, OPEC tries to maintain oil price stability. If it gets too low, they don't make enough money. If it gets too high it creates political instability and jeopardizes security relationships with the US and Europe. So every 3 months OPEC meets and looks at oil supply and the projected demand and they adjust production to maintain a price floor and a price ceiling. Before the war this was typically $70-80. In years past it might've been $60-70. They don't always succeed because of exteranl factors, unforeseeable changes in demand or even just member countries lying about production or production cuts.
So in April-May, the then Trump administration went to Saudi Arabia to get them and OPEC to cut oil production [1][2][3]. Instead of the 3 monthly reviews which would've naturally cut production anyway to maintain the price, Trump browbeat MBS into a 2 year production cut, initially 9.7Mbpd (million barrels per day) and then reducing over time to I believe 6.3Mbps [4].
This was a disastrous deal. You can overlay a chart of the 2 year deal and global inflation and they match up pretty much exactly.
The Biden administration quietly went to MBS and asked him to end the deal. He refused. There are historical reasons for this, namely that the US (under Trump) had kinda screwed Saudi Arabia over in 2015, 2017 and 2018 but I digress.
So in the US the politics of this were that Republicans were going to pin this on Biden (even though it was a Trump deal) and the Democrats were never going to blame Saudi Arabia. Instead it was just "oil companies are greedy and bad" from a pure short-term politics POV. Nobody brought up the 2020 OPEC deal. And that's wild to me. It just goes to show that US foreign policy is uniparty and a Democratic administration was never going to publicly split with an ally like Saudi Arabia.
So does OPEC matter? Well they were instrumental in enforcing that deal. So you tell me.
[1]: https://www.reuters.com/article/economy/special-report-trump...
[2]: https://www.reuters.com/article/business/opec-russia-approve...
[3]: https://www.reuters.com/business/energy/opec-would-miss-frie...
[4]: https://www.reuters.com/article/us-global-oil-saudi-cuts-idU...
While I like the parent's provided information, I feel like the pandemic, fiscal stimulus, and wars were bigger drivers for inflation!
[0] https://www.reuters.com/article/business/healthcare-pharmace...
UAE leaving OPEC is like breaking up a workers union. UAE is no longer required to restrict how much oil it exports, and also doesn't have to set a price floor. They're allowed to sell more oil cheaper, potentially at the expense of neighboring OPEC countries.
Which to me sounds like a good thing for the rest of the world?
If you've been involved in an SDO ("Standards Development Organisation" think ISO or the IETF although the IETF would insist that they are not in fact an "Organisation" they will admit to being in effect an SDO) you've probably at least glanced at documents explaining that you absolutely must not do anything which looks like Cartel activity, you can't use the SDO to agree prices, or to cut up territory or similar things. The SDO's lawyers will have insisted they make sure every participant knows about this because they don't want to end up in prison or worse.
However the trick for OPEC is that it's a cartel of sovereign entities. It can't be against the rules because its members are the ones who decide the rules. So Chevron and Shell and so on cannot be members of OPEC but the UAE and Venezuela can.
It probably isn't a bad thing, but let's not overestimate the beneficial effects. The reason oil prices are high right now isn't because of cartel fuckery, it's because of Trump and his war. And oil supply chains are in such chaos because of Trump's war that even if it ended tomorrow it would take markets multiple years to return to a pre-war state.
The bottom line is that oil prices are going to be elevated for years to come, and when oil prices are high, OPEC has nothing to do other than sit back and collect the profits. And thanks to the ongoing solar revolution, oil's days as the world's predominant geopolitical poker chip are numbered; by mid-century OPEC won't be relevant anyway.
Even if this turns out to be true, it would be irrelevant. The reason that oil occupies the geopolitical role it does today is because of its potential to rapidly bring the entire developed world to a halt. Oil will always be in demand because of its many useful applications (and this demand may even grow in absolute terms despite declining per-capita consumption, because the global human population is projected to continue increasing well into the latter half of the century), but as an energy source, by 2050 it will have so many highly-available complements that an oil cartel will be as relevant as a potato cartel.
https://www.cbc.ca/news/world/potato-cartel-fries-tater-tots...
UAE leaving means UAE can price below OPEC's target and take more of the market. OPEC will have to react and lower prices or concede some of the market.
Does any of this matter if the major players can't ship oil through Hormuz? Who knows...
And while it's true many member exceed targets, it's like speeding on US highways: everyone does it, but anyone driving 20 mph faster than the pack is nobody's friend. Karma will happen.
"In 1949, Venezuela initiated the move towards the establishment of what would become OPEC, by inviting Iran, Iraq, Kuwait and Saudi Arabia" ...
Nigeria joined OPEC in 1971.
OPEC or UAE?
Recently the UAE faction in Yemen was forcefully reined in by the house of Saud, and OPEC kind of prioritises different things than the UAE, i.e. not pushing profits hard in the short to medium term instead focusing on stability and predictability.
Currently the saudis are trying to resolve the Hormuz issue and the attack on Iran through diplomacy, which the UAE is not exactly fond of and would rather see a violent solution. In part this is coloured by the close relation between the UAE and Israel, both of which share the view that running militant factions in failed states is preferable to orderly international relations between sovereigns. The saudis aren't as keen on this type of foreign policy and in other aspects also not as friendly with Israel as the UAE.
The UAE has been signaling that they don't really want to be a part of OPEC since at least 2020 or so. Them actually leaving was to be expected, the question should have been 'when' rather than 'if'. Iranian retaliations on the UAE and subsequent damage to the reputation of mainly Dubai and Abu Dhabi as well as capital flight probably strengthened the UAE politicians longing to get out of OPEC and start pumping and selling at full capacity to try and make as much money as possible as fast as possible.
If the UAE does not do this it'll be more exposed to credit and currencies besides the US dollar, which they probably find rather inconvenient.
Slowly weakening remaining Arab states and setting them up to fight each other.
Production limits were always a bit shady. Most meetings were just nations declaring what they'd (be able to) do and then a lot of talking to maybe see if things could be tweaked a bit and come up with a statement that made it look useful.
Their last 'success' was before Russia-Ukraine where they basically tried to suppress the price to make US shale too expensive and reduce its market share. Which happened. But again, debatable to what extend by OPEC's influence while they do write their own press release - with the explicit goal that the perception of power increases the price more.
Currently the entire region is going up in flames and allegiances are being stressed to breaking point.
The UAE leaving - as far as i can tell - is just a middle finger telling some of the club members its a farce and useless when it comes to its goals and (soft) powers, in the new reality of war & US export dominance. The middle finger being a political signal as everyone seems to be in disagreement on how best to handle the Israel-US-Iran war.
The UAE has had a long standing land dispute with Iran.
The recent barrage of missiles might have just pushed the UAE leadership to have lost patience with their northern neighbor.
This might be an act of protest.
An alternative is the US trying to dismantle OPEC together with its new found supply in Venezuela to drive prices down
2) Thus far, the UAE has been prevented from maximizing its revenues due to OPEC/OPEC+ production caps which is no longer acceptable due to global needs. It can now chart its own independent course by ramping up production and earn hard currency which can be its leverage against an uncertain future. For instance, UAE just signed a deal with South Korea to give it guaranteed "priority access" (meaning first before others) and "joint stockpiling" (for world market) of 24 million barrels. Other countries in Asia who have storage capabilities are also "tripping over each other" to cut similar deals with UAE. This is once-in-a-lifetime opportunity not to be missed.
3) Discontent with OPEC/OPEC+ and its members since the current conflict has made it clear that nobody will come to its aid when the chips are down (other than the US). It is "every man for himself" now and thus UAE has decided to chart its own independent path.
This is very welcome news and i hope other OPEC/OPEC+ members will also follow suit in their own national interests.
2) They can gain by increasing their production, IF they can get that out through Hozmuz. And IF (after Hormuz is opened) other OPEC+ countries DO NOT decide to do the same and the price of oil collapses.
3) US did not meaningfully came to their help. The high-end air defense systems were reserved/moved to Isreal. They mostly defended themselves, with the stuff they bought over the years from the US. A slightly cynical take would be 'classic protection racket'.
4) The national interests of other OPEC members are best served by being united against greater forces from outside region, not by fracturing and bickering among themselves. This is classical divide and conquer.
Not quite. ADCOP was carrying 50% of UAE production (1.5-1.8 million bpd) and is being ramped up significantly. OPEC had limited UAE's output to 2.9-3.5 million bpd thus far and since the conflict UAE has been targeting 5 million bpd. With this announcement the dependence on Hormuz is being lessened drastically.
> 2) They can gain by increasing their production, IF they can get that out through Hozmuz. And IF (after Hormuz is opened) other OPEC+ countries DO NOT decide to do the same and the price of oil collapses.
As pointed out above Hormuz is being bypassed with ADCOP's capacity being ramped up. I am willing to bet, this announcement is what will get Iran to seriously consider removing its blockade of Strait of Hormuz since its main leverage will be gone. A good example is Russia's loss of leverage over Europe when most of the EU countries cut their dependencies on Russian Oil/Gas since the start of the Ukraine war.
> 3) US did not meaningfully came to their help. The high-end air defense systems were reserved/moved to Isreal. They mostly defended themselves, with the stuff they bought over the years from the US. A slightly cynical take would be 'classic protection racket'.
Most of UAE's equipment is from the US. See US approves $7 billion more in weapons for UAE - https://www.reuters.com/world/middle-east/us-approves-7-bill... and U.S. Considers Financial Support for Oil-Rich U.A.E - https://www.nytimes.com/2026/04/21/business/economy/us-uae-f... Only recently have they started diversifying with a major defence deal with South Korea.
> 4) The national interests of other OPEC members are best served by being united against greater forces from outside region, not by fracturing and bickering among themselves. This is classical divide and conquer.
Nope; OPEC/OPEC+ exists only to serve the interests of Saudi Arabia and Russia. The others went along since money was rolling in anyway. But now the geopolitical situation has changed and every member has to look after its own national interests.
Why/how?
Without a healthy cartel, wouldn't prices go down? Cheaper oil means less adoption of alternate energy sources.
Only the non-competitive ones. That's how competition works.
OPEC would be deemed an illegal anti-consumer price fixing scheme under the laws of any country with even the most basic of anti-trust laws, if not for the fact that its entirely composed of sovereign countries not subject to any law but their own.
That moves prices upward, because people are willing to pay more, but increasing production is not like turning the faucet in your home. It takes time. This is the instability of oil production that OPEC tries to prevent, to keep the world hooked on readily available just cheap enough oil.
> instability of oil production that OPEC tries to prevent
First of all, if the goal is to prevent instability OPEC is doing a terrible job. Secondly, a cartel is not needed to prevent price instability, as demonstrated by the hundreds of other commodity markets around the world which are not controlled by cartels engaging in price fixing schemes.
As with any cartel, the purpose of OPEC is to maximize profits for its members, artificially fixing the price of oil at a level higher than what it would otherwise be in a free market not controlled by a cartel. Price stability is a side effect of that, not the goal.
I mentioned this upthread, the instability OPEC is trying to prevent is civil unrest from not being able to fund their social programs and governments. They need a price that puts them in the black and the rest of the world will pay. If it was a free market the fracking boom would still be raging and oil would be $30/bbl. Many gulf nations would fall apart if oil was at that price for a long period of time hence the price manipulation. (I'm not sure how they got the frackers to ease up, some say many of the frackers were bought out by OPEC members and their wells capped but that's just conspiracy afaik)
If the price of oil remains low the gulf governments can't fund their social programs and risk instability. That may not be the only reason for OPEC but it's a major one.
When fracking really took off the writing was on the wall and I think many OPEC nations have since taken serious measures to shield themselves from price drops. This is probably why the UAE can now feasibly leave OPEC. I thought the fracking boom was the end of OPEC but they managed to hang on.
Oil production and distribution is basically infrastructure, like energy or internet. It can't really follow free market dynamics without eating itself.
Yes and we've seen negative electricity price in some EU countries a few days ago: very sunny days but not too warm, perfect for solar panels. Supply surpassing consumption: negative electricity prices.
While we're, supposedly, living through an energy crisis. There may oil shipment issues and there are issues with energy due to the Russia/Ukraine war too but... Many already understood that there were solutions to not be entirely dependent on oil.
Doomsayers are going to argue that "we need electricity during the winter at 6 pm" so a "largely negative electricity on a sunny sunday means nothing" (Belgium, two days ago: hugely negative electricity prices, for example and it's not the only case) but the truth is: we're not anywhere near as dependent on oil as we were during the Yum Kippur war / 1973 oil shock.
And oil is definitely limited in how high it can go for as soon as it goes up, suddenly other energy source make more and more sense economically.
Once again: negative electricity prices two days ago. Let that sink in.
They can, though? Batteries can offset the start-up times, otherwise gas plants can start up within minutes and nuclear can ramp up within days
Turbines could work. But that's not the majority of plants.
Where does the article say that? It says this is expected to lower the price of oil.
It also says that, because the price of oil is currently unstable, the impact will be difficult to see:
> Mazrouei said the move, in which the UAE will also leave the OPEC+ grouping, would not have a huge impact on the market because of the situation in the strait.
But it doesn't say anywhere that there's uncertainty over in which direction this moves the price of oil. The uncertainty is over what the price of oil will be.
The writing is on the wall for fossil fuels. Even _they_ are doubling down on solar power and switching away from fossil fuel.
https://en.wikipedia.org/wiki/Solar_power_in_the_United_Arab...
There are dozens of ways to increase production through world peace, better drilling technology and ideological conversion. Most of African production is well below geological potential (Libya being the easiest example, but also applies to Nigeria and the DRC etc). European shale is barely investigated, Russia is restricted by sanctions, the Middle East by war. Antartica and the Falklands are relatively unexplored but feasible.
However, the electrification of transport will erode demand in everything besides heavy shipping and jet fuel. Without that demand oil prices will crater.
Not sure I buy that. Oil will still be in demand as a chemical feedstock. In fact, there are already people saying that oil is too precious to use as a fuel.
Substitution is highly impractical in the short term but in a conversations of decades/centuries it's significant. Venezuela's reserves alone could run the world's petrochemicals for 60 years (Gemini) so it's a realistic perspective. Together with other proven reserves we could be okay for centuries.
Recycling is sometimes an option too.
If we have plenty of energy anyway we can just make exactly what we need, no need to drill for a mix of pot luck hydrocarbons. If we don't have enough energy anyway then we're burning hydrocarbons to get energy and we might as well use them as a feedstock too.
That's to say, I think you forgot to update your number when time passed.
1 - time started at the 1970s, that's a well known fact
I can't see how it is actually a win for Trump. OPEC has mostly been a big partner with the US. They are the ones that have mandated using the dollar as the baseline currency for buying and selling OPEC oil.
The UAE's exit almost certainly signals they are planning on selling oil in other currencies (probably the Chinese yuan). It's also a sign of the UAE wanting out of the partnership it's enjoyed with the US and it's allies.
Has anyone ever quantified the benefit the U.S. supposedly gets from dollar denominated oil? How does that compare to the cost to the U.S. of paying cartel pricing for oil? Given that the U.S. is a huge oil consumer, surely the cost to it of cartel pricing in oil is huge.
It's kind of unfair.
If they can recoup some of those losses selling outside the system in Chinese currency, (or even in US currency), I have to imagine that would provide some ameliorative relief. It won't make them whole. They've got a lot of problems right now. But I mean, at least it starts them filling back in the giant hole that everyone else dug for them.
On the other hand, from the longer term point of view, it looks like big part of the business model of UAE/Dubai (a safe, luxury place for rich) has been shattered and I don't see it coming back.
In the short term, they might want extra revenue, but in the long term, creating extra tensions with their neighbour can't be good.
I mean, I don’t even know if I mean this sarcastically anymore, but are we sure that Trump and the US’ interests are aligned? I think something can be a win for Trump and a loss for the USA.
In fact, it may even be possible for this to be more in line with the vision of people who did not vote for Trump than the people who voted for him.
If you look at presidents historically, there are some occasions where the vision they described during the campaign to get votes is not in fact the vision they bring about while governing.
Also - what is your presumption of what my vision of the USA might be?
Whether he finds the overall effects positive or negative is a different question.
For a super brief background, the US has what's been called an oil-for-security deal with Saudi Arabia since 1945. The US supports the Saudi royal family and Saudi Arabia keeps the oil flowing, which has largely been the case (other than 1973). Saudi Arabia remains the "big dog" in OPEC. OPEC+ is really about Russia even though it also includes Kazakhstan and Mexico. Russia became a major oil producer and exporter in the last 20-30 years.
OPEC generally likes stability in oil prices. How it works now is that every 3 months they meet and figure out what the demand for oil will be and adjust production based on that projection to maintain both a price floor and a price ceiling. Prior to this conflict that range was $70-80. Each member gets a share of that production. OPEC hasn't always been successful in policing member countries who have at times exceeded their production targets and also lied about production cuts.
Gulf countries now are utterly dependent on US arms to maintain their (typically unpoular) despotic regimes (usually monarchies). The UAE is particularly belligerent here. I view Dubai as a cleaner, shinier Mos Eisley. The UAE is directly responsible for the genocide in South Sudan. US arms are diverted to the RSF in exchange for illegally smuggled gold to Duabi that gets laundered via Switzerland [1]. Dubai is a terrible place.
Beyond Russia's rise as a major energy exporter, the US also became one in the last 15 years, particularly in 2015 when the export ban was lifted on crude oil (which had been there since the 1973 oil shock). OPEC countries are generally unhappy about this development because every barrel the US exports tends to be 1 barrel OPEN doesn't. But they're also largely powerless to do anything about it.
The Iran War is a massive strategic blunder by the US because it's shown the US has been unable to stop Iran from closing the Strait of Hormuz despite spending $1T+ a eyar on its military but, just as bad, it's shown that the US cannot or will not defend GCC countries or even its own bases in those countries from Iranian counterattacks.
Foreign countries generally pay for US bases as part of a broader security agreement and the idea of joint responsibility for security guarantees. But what if those guarantees are essentially worthless? This will completely reshape the US relationships with GCC countries. The UAE is really just the first domino to fall.
Short-term this smells like the US is either behind this break or at least approves of it. The idea is probably for the UAE to increase production in an effort to stabilize oil prices. This administration has also shown a complete disregard for historic alliances (including NATO) and they probably view OPEC as a cartel they want to break up. But I think this will long-term further destabilize the region and I wouldn't be surprised if some of these governments end up falling or at least break security ties with the US.
If anything, GCC countries will likely see China as a more reliable and stable trading and security partner as a result of all this.
[1]: https://www.democracynow.org/2025/1/28/sudan
I've seen reporting over the past week or so regarding the US potentially bailing out the UAE to make up for the financial harm and damage it's suffered due to the US-Iran war. How likely do you think it is that the UAE leaving OPEC is a condition for that financial assistance?
So yes, I can see this admin seeing OPEC as a cartel that is against US interests even though OPEC actually stabilizes global oil prices, actively. I also believe it's highly likely that the US wants to crash the global oil market when the Strait eventually reopens ahead of the midterms.
I too have seen the reports of a potential US UAE bailout and that could be leverage here. It's too early to say. It'll take time to realize the consequences of this deal and understand what led up to it and what the real goals are.
The whole war goes beyond miscalculation. It's the worst strategic blunder in US history (IMHO) and it's not even close. In 1973, the worst impacts happened 6 months after the blockade started. Well, guess what's in 6 months? The midterms. Iran is acutely aware of the US domestic politics of this. Iran also knows this is their best possible chance to end economic sanctions. Iran is more prepared to wait this out. Their goal really is to make the cost of this war so high that the US will never again think about repeating it.
But when the Strait does open, which will happen eventually, the UAE will probably go to town so to speak, exporting well above what they might've otherwise as an OPEC member.
My suspicion is that this is what the UAE's move is really about and whY I think the US is giving at least tacit approval if they're not outright behind it.