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)
Saudi are staying and UAE is leaving because they want to pump more.
They want to pump more than they can hide, so they're leaving.
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.
it doesn't have to be cheaper to be a problem, as long as somebody still makes money on it and corruption still exists.
And corruption is one of those annoying problems that dont go away easy
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.
There are economic mechanisms for this (e.g. https://en.wikipedia.org/wiki/EU_Carbon_Border_Adjustment_Me...) but broadly, yes, it is difficult.
Isn’t solar already cheaper?
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.
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]:
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.
Then they all pump more every year
-1: modern oil is operating at a scale where cheating is easy to catch. You'd need MMs per day barrels to move the needle.
https://chatgpt.com/share/69f0d6a3-3f2c-83e8-a944-094d84e155...
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.
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.
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.
Cheap and plentiful fossil fuels.
We’re rolling back CAFE standards too.
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.
"It's your fault you didn't expressly disallow what I ended up doing to get around what you asked me not to do"
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.
Tell that to the literal constant flow of old men I see driving pristine F150s in the metropolitan center of the Canadian city I live in.
> customers will demand more efficient vehicles
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.
> 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.
You can’t convince (almost all) consumers to spend money on something that they do not want.
Of course you can. And for the rest, you just discontinue the product they want so they have no choice.
You can make them want things. Ad money is what powers some of the most successful companies.
You can, but it’s easier to convince them to want something that they don’t need or is actively harmful.
That's the entire point of the trillion dollar advertising industry
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.
Ditto with the Sentra and the Versa.
This is my point exactly.
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.
You can buy a Ford Maverick compact pickup truck from your local dealer today.
The profit margins on larger trucks are higher precisely because that's what consumers want. No one is forcing them to buy those vehicles.
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
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.
It isn't about weight, it's way stupider than that: https://www.youtube.com/watch?v=YpuX-5E7xoU
Tall grilles are a purely aesthetic choice. We could create safety standards for pedestrian impacts and end this inane trend. And still drive trucks!
The VW Up electric sold really well but was discontinued.
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.
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.
What if consumers want to buy Chinese electric cars? Are we going to remove that bit of protectionism?
Increasing prices doesn't effect demand right? $10+ per pack cigarettes in California hasn't had any affect on smoking rates.
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).
Yeah, but "increasing taxes" always rouses the rabble.
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.
It's the other way around: Renewables will remain a fantasy until we achieve energy independence.
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.
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.
The US, or Saudi Arabia, or Venezuela, or Russia could very well be energy independent on fossil fuels alone, even though that won't be wise.
Europe, or China, or India could not though.
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).
This is already happening [1]. I think even an UK connection is in works.
[1] https://en.wikipedia.org/wiki/Spain-Morocco_interconnection
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.
Self sufficiency generally comes at a cost. The whole promise of globalization is that it makes things cheaper.
"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.
To my mind, it's still an automobile, but not a posh one. It's like "I wear a suit with a necktie, but my son wears fatigues".
Only a little bit of time in the ME but the Land Rover is likely considered higher status.
Camels are cool still.
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.
And where is the Jaecoo?
Its a fun line, but the volume of money they have and the way its managed says they are looking at retaining that wealth somehow
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.
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.
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.
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.
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
> UAE announced this week they might start selling oil in yuan
That is just UAE pressure to make sure they get their dollar swap deal: https://www.reuters.com/world/middle-east/trump-says-currenc...
Indeed it’s leverage but at same time they only need the swap because all is not well in petrodollar land.
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.
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
What does this mean?
[1] https://www.wsj.com/world/middle-east/iran-is-flooded-with-s...
> 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.
"only the paranoid survive"
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.
“Might” and either way breaking OPEC is good for the West, regardless of their intent
defecting from the cartel, a tale as old as time
>UAE announced this week they might start selling oil in yuan
I have read this headline dozens of times in the previous 30 years.
I don’t think the gulf is in same as always mode right now
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.
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?
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?
Someone has at several different points. It isn't always the same someone, but someone.
Which country?
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).
Is "polic" a word?
Russia-led? Russia isn't even part of OPEC.
I believe they are in opec+
That's the ad-free version, it's an extra $12.99 a month.
it's not really worth it after the recent price-hike, they aren't putting out content like they used to
UAE is responsible for 12-13% of OPEC output as its third most productive member.
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.
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.
Just my hunch but Iran is a founding member of OPEC.
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.
They don’t have production limits anymore, and can produce and sell as much oil as they have capacity for.
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'.
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.
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).
The US is bailing out the UAE for liquify issues and this is likely a quid pro quo in return??
Well, it looks like the return on investment for that 747 bribe is pretty bad.
Some more discussion: https://news.ycombinator.com/item?id=47933983
is there a vested interest for usa and our war partner ?
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.
What's a good investment vehicle for broader energy transition?
Well, looks like that was the price for getting the USD swap line. Milkshake theory won't last long, just like the petro dollar.
> 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 no rules requiring its members to sell oil in US dollars. Iran and Venezuela are members of OPEC.
> 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.
It will probably increase total global oil production, which is good for the US consumer (what Trump seems to care about more), but not US producers.
> 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.
Majority of US voted for Trump. Maybe not aligned with your version of US, but this is what the majority wanted
Only about 1/3 of registered voters actually voted for him. About 1/3 of registered voters sat that election out.
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.
It's a win for Trump in the pretty straightforward sense that it's something he publicly announced he wanted.
Whether he finds the overall effects positive or negative is a different question.
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.