(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...
It's pretty convoluted logic to blame Israel for Iran attacking the UAE.
Iran has also directly attacked civilian infrastructure in the UAE and other gulf nations. That's on Iran, not Israel or the US - Iran chose to attack its neighbors (again).
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...
Kind of depressing thought actually.
I gotchu: https://youtu.be/-evIyrrjTTY ("This Land is Mine", 3 min)
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?
I guess Al-Qaeda and Isis are also there.
"I and my brother against my cousin, and I and my cousin against the stranger."
"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
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
Don't Egypt and Israel hate each other though? Could UAE feasibly align with both?
So yes, the UAE could align with both.
This is true, but Emiratis are a notable exception. The UAE may be the only Arab country where Jews are not only allowed to live, but can do so safely without fearing either their neighbors or their government.
For example, last year when a rabbi was murdered, the Emirati government reacted forcefully and made a point to sentence the perpetrators to death. Note, the perpetrators were not Emiratis.
> The modern Egyptian state is oriented toward close partnership with the US, and a large part of that was peace with Israel post '73.
While also true, the relationship between Israel and Egypt has been tense lately.
They are at peace, and the border is stable. And economic integration is tightening, for example with the recent $35B gas deal [1]. So it's plausible that UAE could align with both, as you say.
But at the same time, it's just as plausible that this alignment will become increasingly complicated for geopolitical reasons. As Israel grows stronger in the region, Egypt seems to have adopted a strategy of indirectly undermining them.
For example, Egypt's handling of the Gaza war has indicated that they were playing a double game - openly containing Hamas, while covertly allowing them to grow stronger. When the IDF captured Rafah in 2024, they uncovered massive smuggling tunnels under the Egypt-Gaza border, which could not possibly have been unknown to Egypt.
Sisi is also known for having cracked down on the Muslim Brotherhood domestically, as they were his primary political rival. But externally, he has shown a willingness to support them as a tool to weaken his rivals, including Israel. This is a dangerous game which could easily backfire.
One more example: just this week Egypt is conducting a live fire military exercise 100m from the Israel border - a deliberate decision that is escalating tensions. [2]
[1] https://www.egyptindependent.com/all-you-need-to-know-about-...
[2] https://defencesecurityasia.com/en/egypt-live-fire-drills-is...
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
Remember that 20% of the Israeli population is Arab.
I'd add the US to that as well. Both the UAE and Israel are highly (practically solely) dependent on US for their military tech and supplies.
[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.
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.
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...
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.
And corruption is one of those annoying problems that dont go away easy
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]:
There are a number of elements that go into gas prices like additives, refining margin (called the "crack spread") and distribution but crude oil prices are a huge part of that. Also, like anything demand plays a huge role and that means the market's expectation for future supply.
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.
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.
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?
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)
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.
This is an initial but big crack in shaking up global oil markets in a way that meaningfully shifts global power dynamics.
We’re rolling back CAFE standards too.
America is already fucked, given how awful its urban sprawl is. Trucks used for commuting and not haulage just makes it double fucked.
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.
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 ships passing through the straight now are also paying Iran in RMB and crypto.
The petrodollar is the objective.
This isn't over any time soon
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.
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.
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).
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...
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...
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.
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
Isn’t it 30-50%ish depending on how you count it? Calling it “a fraction” makes it sound much smaller in conventional English.
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_...
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.
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.
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:
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.
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.
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...
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.
> 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
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.
Which month?
The dollar isn't strong because oil is traded in it. Oil is traded in dollars because the dollar is strong. What makes the dollar strong? The US military and, at least up until now, the US essentially guaranteeing global maritime trade. Oh and the US also being the world's arms dealer. Why this is such a huge strategic blunder is because the US has proven itself unable to militarily open the Strait of Hormuz. This should surprise precisely no one. The Joint Chiefs knew it. The Intelligence community knew it.
Let me put this another way: you could make all oil trades in euros tomorrow and pretty much everyone would still hold dollars and convert to euros as needed. People don't understand this so you get silly conspiracy theories around, say, the Iraq War being started because Saddam Hussein was starting to trade oil in euros.
Let me give you a concrete example of this all in action. Iran has threatened to charge tolls to pass through the Strait and they wanted to be paid in crypto, largely to avoid having their funds frozen (as has already happened) because the US has that kind of control over the financial system. But that's still a problem because all US companies and any financial institution that wants to main access to the global financial system isn't legally allowed to trade with Iran, even in crypto. My point is that all of this could be traded in crypto and it wouldn't matter. The "petrodollar" would still rule.
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.
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.
"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?
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.
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
- why now? What has changed that made the lack of limits more attractive than it used to be?
- despite no limits, the strait is blocked, so they still can’t sell anything?
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.
If I had to guess, the UAE is looking to form petro-alliances, and have a negotiating leverage. They're have to compete, and they can't beat saudi. So, either the US caters to their demands, or they'll be forming alliances with india and china, where currently OPEC's price setting was a limiting factor.
China is currently importing 1.6M barrels/day from Brazil
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.
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
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.
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
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.
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.
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.
