(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?
Saudi Arabia has the East-West Pipeline [1] that takes ~7Mbpd (million barrels per day) of oil to Red Sea ports to avoid the Strait of Hormuz. They were already using it so there's not a lot of extra capacity they can get out. If we continue up the escalation ladder, the next big risk is that the Houthis close Bab al-Mandab, which is a not-quite-as-narrow but still vulnerable chokepoint to the Red Sea.
The UAE has the ADCOP (Abu Dhabi Cross Oil Pipeline) [2], which takes ~1.8Mbpd to the Gulf of Oman. This is beyond the Strait of Hormuz but not that far so technically is still vulnerable to drone attacks (in particular) from Iran if, again, we climb the escalation ladder.
The real issue is American security guarantees to GCC nations have been shown to be an illusion. Heck, the US can't protect their own bases in the region. Also, the US can't protect maritime traffic through the Strait. I mean this is in all seriousness: there is no military solution to this problem short of the use of nuclear weapons.
That means we are now in a situation where the US has to either split with Israel and offer Iran significantly better terms than they had before the war, likely including the lfiting of economic sanctions, or the US has to sit and watch the world plunge into recession and Asian countries in particular are going to burn. And who knows what a prolonged impasse will do to Europe, particularly come winter.
So far, the US seems to prefer letting the world burn rather thans plitting with Israel.
A protection racket ceases to be a protection racket if it no longer offers protection.
They won't sit still, though. Eventually, if this were tried, we'd see Chinese-flagged tankers buying passage rights from Iran and being escorted by PLAN ships.
No way does Commander TACO take that shot. The US interdiction threat in the gulf is empty, and everyone know it. Iran gets paid at the end of every story. The whole boondoggle has been a failure for the US in every analysis.
>That means we are now in a situation where the US has to either split with Israel and offer Iran significantly better terms than they had before the war, likely including the lfiting of economic sanctions, or the US has to sit and watch the world plunge into recession and Asian countries in particular are going to burn. And who knows what a prolonged impasse will do to Europe, particularly come winter.
I have the impression that somehow if the world will go into a recession, China will come out ahead. It looks like they either prepared for it or they have enough space to maneuver.
UAE is the third largest producer in OPEC, and has options to avoid the straight, yet Their economy recently get shocked though by the war they wanted to avoid
The problems the UAE has are not based on Iran attacking the UAE but Iran closing the Strait - which is a direct and foreseeable result of Israel attacking Iran.
Someone's going to have to provide me with an explainer of how many different proxy forces are involved in Yemen. I can barely keep up with Lebanon and have forgotten Syria.
> an explainer of how many different proxy forces are involved in Yemen
RealLifeLore has been doing a decent job covering it [1].
The broad summary is you have the Saudi-backed unity government, the Iranian-backed Houthis, who claim all of Yemen but practically want North Yemen, and the UAE-backed STC, who also claim all of Yemen but practically want South Yemen. Emiratis bring the Israelis to the party. The Iranians bring the Russians. The Saudis bring various international elements (I know less about them than the Houthis and STC).
Years ago I had found his channel and liked it, and then some video (I don’t remember the title or even subject at this time) came up on a subject I happened to know quite a bit about. He got to some point in an explanation, bungled it, and then hand-waved it away, saying the details were unimportant.
Stopped caring about anything he had to say after that, and I also then realized that there was a an entire genre of “person with no actual expertise reads Wikipedia articles and explains them with good lighting and high production quality.”
Same. It was the "How The U.S. Ruined Bread" video for me after which I started watching critically and found the editing style to be over the top and makes it harder to think about the content while it's being presented. So I eventually stopped watching.
> The quick cuts and dazzling montages, as well as the dramatic shots of Harris absorbed by a document he’s unearthed, highlighting it suspensefully in tight close-ups, all lend credence to the often-excellent work he does. But it also makes it easy to mask his mistakes. And for someone who takes journalism to heart, his mistakes are big, leading to oversimplification and an occasional lapse in skepticism.
[...]
> In a video that garnered 8.5 million views and which Harris thumbnailed with the words “WE HAVE PROOF,” Harris explores the recent craze over UFO sightings—sorry, UAP sightings, meaning unexplained anomalous phenomena. In passing, he mentions Mick West, who has done excellent work debunking a lot of blurry footage of what is alleged to be high-tech spy drones or aliens.
> But the bulk of the video is spent leering at report after report—a total of 144 are being investigated by the U.S. government right now!—while original music amps up the mystery. The emphasis on evidence over context is key to Harris’ style: flood the space with visuals that keep your attention and elicit questions and only occasionally pull back to explain.
Most things? That's a really strong claim, do you have anything to back it up with? Just a couple videos here and there wouldn't cut it, given how strong your claim is.
For what it's worth I watch his videos and he seems to touch on incredibly valuable topics I would never hear about otherwise, like [1].
STC was defeated after a Saudi bombing campaign, and their independent nation quashed. While there might be holdouts here and there, they are a non-entity now.
Quite impressive how they folded. UAE bluff was called spectacularly and I think that, in the future, looking back, that event might mark the beginning of the end of their geopolitical ambitions.
> that event might mark the beginning of the end of their geopolitical ambitions.
i hope so, they have been one of the biggest sources of discord in the Middle East, funding civil wars in Libya, Sudan, Yemen, funding a coup in Egypt.
Not really there are time of instability but large stretches of stable government usually under a single empire the Persians, Rome, Caliphs and then Ottomans. The current shit show is due to a western induced collapse of the ottomans and then western powers ensuring no single nation can once again enforce that stability.
>Not really there are time of instability but large stretches of stable government usually under a single empire the Persians, Rome, Caliphs and then Ottomans.
The Gulf countries now are in a far better condition than they were under the Ottomans (and than modern Turkey). "Stability" is what led the Ottoman Empire to devolve into a backwards, economically undeveloped society that was incapable of competing with the west.
Lots of things have existed throughout history, yet we have overcome them in the last few hundred years. There is peace in Europe (west of Russia) which had as ancient conflict as Yemen; there is democracy, freedom, women have equal rights in much of the world, starvation and many diseases are mostly overcome, warfare is very rare and not an omnipresent threat, ...
Thank goodness our predecessors didn't think this way. They thought that through reason, hard word, and humanism they could overcome these things, and they did. No doubt there were plenty of naysayers.
I wouldn't get too complacent about peace in Europe. The peace in the last 80 years or so was the result of very specific conditions that no longer apply.
While I commend the positive attitude and I tend to have a positive view on the trajectory of humanity.
This part of the planet has been almost intractable since the age of Hammurabi - it is quite fractured without any current overarching unity or framework. There isn't a dominant religion (similar to Europe) or shared values. I could say almost meaningless things like "thought that through reason, hard word, and humanism they could overcome these things" which would make little of the hard truths of the long histories of the varied peoples and fractions of the area.
It would almost seem naive to say things like because we've solved some tough problems in the last century we can solve all problems.
I think you gloss over much and certainly give yourself a mightier than thou feeling with your "Thank goodness our predecessors didn't think this way".
I too hope for peaceful resolution and stability but fall back to the historic record of success especially in a place that is constantly, recently and historically decimated by war among fiefdoms.
Europe didn't have a common religion before the reformation as well. There were literal crusades inside Europe including against other christians: https://en.wikipedia.org/wiki/Northern_Crusades
The reason is fractured is because of the inherent tribalism within the cultures of the region. Strip away the tribalism (Oman, Qatar, UAE to an extent), concentrate the people near a few cities (Egypt), or provide them a unifying overarching culture (Iran, Turkey), and you get some success. In fact, the early Islamic empires were heavily mired in infighting even though they were "unified" under the Caliphate, in spite of the Prophet's calls for the "Ummah" (One Islamic Nation). I would even argue that Islam's biggest contribution to the region was in providing a specific administrative framework with which to shed the tribal infighting and unite culturally similar but disparate peoples together. It's also why Israel succeeded as a nation with its European flavor of nation-state identity.
An Israeli intelligence officer perhaps correctly attributed it to the past culture of water scarcity and needing to protect your water sources. That is, in the desert, there are only so many sources of water, and if someone steals it away from you, you simply die. So that created a culture of inherent suspicion of outsiders and people outside the clan, even though they all share the same customs and culture.
Defense of Israel was the primary justification offered in a recent State department memo asserting the legal basis for the war with Iran. Unusually, its publication was not announced on social media or to the press, unlike most state department official pronouncements. Anyway, rather than being opinion, this is (for the present) the official position of the United States government.
The US has been doing air strikes in the Middle East on a regular basis since ~1990, and they extensively support the military adventures of allies like Israel and Saudi Arabia.
Saudi Arabia and Somalia agreed upon military cooperation early this is year. Egypt and Turkey are in this axis as well.
Somaliland was recognized by Israel late last year. UAE and Ethiopia are on this axis.
Part of the endgame might be lifting the Middle East from a transit zone to a logistics hub.
Also...their central bank governor quietly asked the US Treasury for a dollar swap line...Combined with the Pakistan $3.5B recall and OPEC exit, that is three coordinated moves of a cashflow stressed country...and of course the US is being asked to extend taxpayer backed dollar credit to the same royal family that bought 49% of Trump's crypto company four days before inauguration...
UAE is in a tough spot because while they have diversified from oil, the industries they have diversified into like tourism, air travel and banking, were relying on a halo of safety that turns out to not exist.
Also, for tourism they aren't exactly welcoming to western culture. They don't even allow trans or non binary people (X) to transit to other places at dubai or abu dhabi. Can't have your cake and eat it.
While true, that doesn't really factor into this given that that market is so small that they don't lose anything by banning things that aren't compatible with their values.
So no, they most definitely can have their cake and eat it, and have done so for over two decades.
Emirates is one of the world’s largest airlines, and in many parts of the world Dubai offers the best and most frequent air connections between various cities. So while UAE itself may be a small market, it’s quite a major transit route.
They also turn a blind eye to plenty of other things that go against conservative islamic values: alcohol is served onboard, gay flight attendants are employed, etc. So it’s surprising to me that they aren’t a bit more tolerant here.
I think it's not so much that they don't have liquid assets they can sell.
The issue is those liquid assets are US Treasuries and US public market equities (mag7 etc.).
They don't really want to sell them, and they also know that the US really doesn't want them to sell them - the last thing Trump wants heading into the midterms is an S&P500 bear market and 10y treasuries heading back to 5+%.
So they ask for a swap line and they're negotiating from a position of strength, the US doesn't have much of a choice but to give them as much as they need and damn the consequences
> Put together, we’re seeing an Emirati-Israeli axis emerging to balance Saudi hegemony in the Gulf and Iranian hegemony over the Persian Gulf. I’d expect to see an Emirati deal with Egypt and India next if this hypothesis is correct.
Don't Egypt and Israel hate each other though? Could UAE feasibly align with both?
Virtually all Arabs hate Israel but Arab governments are more varied. The modern Egyptian state is oriented toward close partnership with the US, and a large part of that was peace with Israel post '73.
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]
By the way that's just Qatari propaganda meant to put a wedge between Israel and Egypt. Qatar(Muslim Brotherhood) hates Egypt (that cracked down on MB) and hates Israel. They paid Netanyahu's advisors to push those lies about Egypt's double game and the cross border tunnels. Netanyahu the clown he is, "leaked" those lies to journalists. Qatar also paid Haaretz journalist to push those lies.
The current situation with Egypt is good. They need to pretend to be somewhat cold to satisfy the hostile to Israel population, but there is cooperation and good relationship.
I did notice that Al-Jazeera was actively covering this issue. So your explanation would make sense.
What about the military exercise though? Al-Jazeera is eagerly covering it, but it is in fact happening...
I'm thinking that two things can be true at once - Egypt sees Israel as a "soft rival" and will undermine it when it can, without risking the peace itself; and Qatar is actively trying to put a wedge between them. No?
The military exercises too, just pure nonsense. Sinai peninsula has complicated security issues that they are trying to control. Egypt depends on Israel for cheap gas and really there is no indication whatsoever for any attempts to undermine. They do exercise soft power and play regional games. Egypt had and has very good leadership (with Sadat being the greatest modern leader in the middle east).
Various Arab states maintain this balancing act between a virulently anti-Israel population and a US-aligned (in most cases, US-installed) regime that’s tacitly okay with the existence of Israel.
It’s actually surprising it’s achievable for so long but in the long term doesn’t feel stable given the direction things are headed
Which Arab regimes, today, are "US installed"? Iraq is the only plausible answer.
As far as stability, I don't know. My view is that Arab democracies are unstable because they will elect Islamists. Dictatorship/monarchy has proven far more stable. Syria is trying to buck the trend; we'll see how it goes.
Maybe more accurate to say “Western-installed” although generally I don’t like grouping Europe and the US together as some coherent entity in this case it’s probably accurate.
All of the Gulf monarchies as well as Jordan are essentially western creations that were created as states mostly by the British and then heavily reinforced by the US from the 70s onwards
i don't think you know much about islamist parties and are just grasping for reasons to justify suppressing democracy in certain places.
ennahada (tunisia), pks (indonesia), jui (pakistan) are all examples of islamist parties that have compromised or reached across
the aisle at various points
just off the top of my head.
besides, isn't the point of democracy to allow people to be led by those who represent their principles? if they are in power, why should the majority expect their elected
leaders to compromise
those principles?
Because every Islamic theocracy to date has been profoundly destabilising for its neighbours and the world, and always ends up imprisoning and immiserating its own people. No one wants more Irans or Afghanistans. (Or Saudi Arabias, though that's not said out loud as often.)
but neither Saudi Arabia nor Afghanistan's leaders were voted in ...
and secular/socialist/monarchic dictatorships have arguably worse effects on their neighbors and citizens - e.g. Saddam, Assad, Nasser, MBZ in UAE, MBS
Yes, there are a lot of bad options in the Middle East; Islamic theocracy has no monopoly on awfulness.
I think the broader point is that a democracy is unstable when the electorate just votes for their favourite warlord / cleric, who promptly ends / rigs any further elections.
In the Middle East, there appears to be a pattern of electorates voting for / staging a revolution in favour of Islamists, which either leads to a terrible Islamist regime, or leads to an elite coup, which of course destroys the democracy in the process. Worst case scenario all of this happens at once in different places, and you get a terrible civil war.
Democracy is great, but it requires an electorate that actually wants to sustain and retain a democracy. Those appear to be few and far in between.
> In the Middle East, there appears to be a pattern of electorates voting for / staging a revolution in favour of Islamists, which either leads to a terrible Islamist regime, or leads to an elite coup, which of course destroys the democracy in the process.
that pattern is hardly unique to middle east/islamists though. look at central/south america. guatemala, chile, brazil etc all had democracies overthrown by "elite" coups.
like almost every instance in the
middle east, there is actually a common denominator between these coups... resistance to the US-led order magically seems to invite instability.
That seems rather Whataboutist to me. I never claimed this only ever happens in the Middle East. We are, however, talking about the Middle East, so local examples would seem apposite. You seem to desire to make this conversation so abstract that it becomes about nothing.
> resistance to the US-led order magically seems to invite instability
Or perhaps 'resistance' is an awfully popular rallying cry for demagogues who bring instability, and the US is just the hegemon du jour. "It's the US' fault your crops are wilting! And international capital! And immigrants! And, oh, I don't know, the gays, why not. Rise up for El Generalissimo! Enlist your sons in the blood struggle, that will definitely improve things!" /s
Much sexier to be a revolutionary fighting shadowy foreign forces than to actually fix any of your own problems. No, no, tomorrow's problems will be America's fault too.
> I never claimed this only ever happens in the Middle East.
you said
> Arab democracies are unstable because they will elect Islamists.
whereas my claim is that governments (democracies or not) that run afoul of their local hegemon tend to have a short shelf life. this is not unique to US hegemony.
see: Brezhnev doctrine (USSR), or the canonical example of Athens and Melos from Peloponnesian war
> Rise up for El Generalissimo! Enlist your sons in the blood struggle, that will definitely improve things!" /s
Much sexier to be a revolutionary fighting shadowy foreign forces than to actually fix any of your own problems. No, no, tomorrow's problems will be America's fault too.
I'm sorry, you seem triggered by this discussion, it doesn't seem productive to continue on my end.
> I'm sorry, you seem triggered by this discussion, it doesn't seem productive to continue on my end.
I suppose shall have to make do without 101-level instruction in Chomskyian anti-Imperialism, woven through with whataboutism and international conspiracies.
> whereas my claim is that governments (democracies or not) that run afoul of their local hegemon tend to have a short shelf life. this is not unique to US hegemony.
Wow, big if true. Someone let Iran know.
How many trillions of dollars and gallons of blood did the US expend to make Afghanistan non-Taliban, or Vietnam non-Communist? And who rules Afghanistan and Vietnam today? You mention the Brezhnev doctrine, and yet literally not one of these countries is Russian-aligned today. The Russian invasion of Afghanistan failed just as hard as the British and American ones, all at the height of those respective countries' powers. Not very powerful, these alleged hegemons.
My overall point is that the Middle East (and Latin America, etc) has many local issues (e.g. corruption, misgovernance, sectarianism, organised crime), and an unhelpful habit of blaming some ill-defined global hegemony for misfortunes that are readily explicable as the consequences of these local phenomena. The US is no innocent lamb, but it does no service to the people of any of these regions to pretend that another hundred years of anti-Imperialist rhetoric will somehow bring benefits that the previous hundred years did not.
In these countries, this brand of tired anti-Imperialism is a figleaf for authoritarians. In the West, it is masturbatory politics for a certain type of narcissistic Westerner with a saviour complex, who fundamentally believes only Westerners have agency in the world, and everyone else are just motes of dust floating in the West's shadow. It's this confluence that results in absolute travesties like Chomsky supporting the Khmer Rouge, a far greater evil than all the worst allegations against America stacked together.
If you want to help the Middle East, get involved in civil society building efforts that help bridge the gap between sectarian communities; support charitable and poverty relief efforts that are not affiliated to the Muslim Brotherhood; get involved in civil rights advocacy on behalf of the oppressed in the Middle East (women, LGBT communities, religious and ethnic minorities, the list goes on); partake in initiatives aimed at tackling corruption, organised crime, etc. Or at the very least encourage and support the people who do these things, rather than regurgitating half-remembered anti-Imperialist tropes from your polsci 101 class, as though that were a contribution of any value whatsoever.
The one thing that will absolutely not help them, at all, is more meandering, false narratives about how they have no agency in the face of shadowy global hegemons, and how should just lie down and wait impassively for some sort of new, more just world to be given to them by their Western betters.
Ok, lot' of stuff to unpack here, but I'll stick to just pointing out obvious misinfo, ehich is often repeated:
Chomsky never backed the Khmer rouge, he questioned some of the claims and western focus on the Khmer rouge, which was ignoring US culpability. He also never denied that the Khmer rouge were committing atrocities.
Was he wrong? Yes, at least in specific instances. But he was never outright supportive of the Khmer rouge. This is very old propaganda.
They've also been cooperating on blockading Gaza for a couple of decades. Israel gets most of the attention for that, mostly rightfully so, but people seem to forget that there's a border with Egypt too and that has also had very limited access.
Egypt learned on other's mistakes for once. They saw how Jordan welcomed Palestinians on their land and they repaid the kindness by launching a coup against the government in 1970. No wonder not a single anti-Israeli coalition country is willing to deal with Palestinians directly at their own home and are keeping borders watertight :) .
Don't forget that after being expelled from Jordan, Arafat relocated to Lebanon where he proceeded to take over the South ("Fatahland"), start a civil war, and pull in Israel with constant attacks across the border. Until Israel kicked them out in 1982, the Palestinians played the disruptive, parasitic role in Lebanon that Hezbollah plays today. In fact, Hezbollah rose to power precisely by filling the void left by the Palestinians in 82.
As an Arab friend summed it up, 'All Arab governments like to trumpet the Palestinian cause when it serves them, but none of them are willing to lift a finger to help the Palestinians.'
Are you sure? Jordanians tried and it burned them spectacularly. And if my memory served, Egypt also tried to some extent and eventually was eagerly and happily offloading Gaza into Israel's hands. Then, they built a huge border defensive line to keep Gazan out that would make Trump's Mexican border a joke in comparison.
Egypt is trying to have their cake and eat it too. Total crackdown on islamists at home - whether Hamas or any other incarnation of the Muslim Brotherhood - but also making sure they remain a thorn in the side of Egypt's rivals. See for example the massive smuggling tunnels discovered by the IDF in Rafah in 2024, which had been keeping Hamas covertly resupplied through Egypt. Hard to imagine that Egypt was unaware.
This is to a large part to give Egypt plausible deniability. They don’t want to deal with Gaza, refugees, or a humanitarian crisis, but also don’t want the political fallout of taking action like the Israelis do.
On the contrary, I believe Israel would be delighted. It would lessen the humanitarian burden on them, and force Egypt to deal with the Hamas problem more directly. It will never happen, though. No Arab country will "throw the gates wide open" for Palestinians. They have done so before, several times, and it went very badly.
The Israeli openly proposed for the Gaza Palestinians to move to Egypt (effectively ethnic cleansing Gaza, their obvious goal), not that long after 7.10.
Egypt said 'HELL NO', first, because they don't want to deal with Palestinians (both political and economic nightmare), and second because it would have been viewed as ceding to Israelis and helping them cleanse Gaza, which would be highly unpopular among their population.
Israel would object to aid and weapons flows into Gaza. It would be fine with Gazans leaving the Strip. The problem is there are currently zero takers globally for a significant Palestinian refugee population, in part, as other comments have mentioned, due to the history of Palestinian refugee populations in the Middle East. (To my knowledge, Palestinian Americans have been fine and productive members of society.)
More like refugees flowing out, which Egypt doesn't want to deal with.
The Palestinians didn't help their cause with Yasser Arafat's Black September uprising in Jordan. Then they topped that up with strong support for Saddam when he invaded Kuwait. Like the ones in Kuwait were literally betraying Kuwaitis to the Iraqi troops.
Oh, and did I forget Lebanon? They literally fomented the civil war.
People don't forget it. But Egypt is a dictatorship aligned with US/Israel, so there's again not much we can do there. Ending foreign aid to Egypt is probably very aligned with ending foreign aid to Israel in terms of popularity among American voters
> Ending foreign aid to Egypt is probably very aligned with ending foreign aid to Israel in terms of popularity among American voters
I strongly suspect the average American has absolutely zero sense of how much foreign aid we give Egypt. That's not to contradict your point directly, just that it isn't a very salient part of American politics (unlike Israeli foreign aid).
> it isn't a very salient part of American politics (unlike Israeli foreign aid).
I feel like Israeli aid, while vastly more salient than it used to be, is still mostly salient as a left-of-center wedge issue, otherwise being about as salient as your average major foreign policy issue - ranking just under the least salient domestic policy issue, which ranks just under the most minor personal quality of any candidate, which ranks under the current state of the economy, which ranks under the current perceived state of the economy. Wow, that's way too many times to use "salient" in one sentence.
And for the record, I'm not arguing about how much people should care, just how much they do.
It's also become a right-of-center (right of far-right?) wedge issue in the past 12 months. But I otherwise completely agree with you; I think there's a veritable chasm between how much the media talks about the US's foreign aid (both to Israel and in general) and how much it actually matters to the average voter.
Your source documents a real phenomenon but doesn't support the universal claim that "Israelis hate Arabs". Please provide evidence proportional to the scope of your argument.
If Egypt were a democracy, its government would hate Israel. That's why the current dictator overthrew the last democracy and had its elected leader die in jail, and that same dictator is now supported heavily by US funding
I think you might be overestimating how liberal the protesters were. Source: I was in Tahrir square during the protests and spoke with many Egyptians.
Almost all of the complaints I heard while I was in Egypt were about corruption and lack of opportunity. It was more frustration with rampant nepotism/cronyism and less a desire for liberalism. From the ground, it appeared to be driven by economic forces and not political ideology.
In fact, many Egyptian men that I spoke to made the argument for the continued oppression of women (e.g. the full burqa and absence from work). In general, the populace was decidedly anti-liberal.
The election of the Muslim Brotherhood happened after I left the country, but it was no surprise to me at all. The fact that they attempted to change the constitution so quickly after their victory was unwise, and the subsequent coup by the West was just as unsurprising.
My bad, it's late in the evening here and I typed something that works when spoken with emphasis and timing (at least in my head).
I added quotes, it should say that Pakistan's weapons program is one that is outside the Nuclear Non-Proliferation Treaty as Pakistan is not a party to it.
Its a pakistani submarine, with exclusive saudi-royalty members on the bridge.
We should build a city that is a statistical bunker- basically a line, for the edge case of jihadist insurgents getting the forbidden eggs in the cake.
IMO the Pakistan aspect is overstated. This is a reversion to the norm of KSA-Pakistan relations before Imran Khan completely destroyed it by fully aligning behind Qatar and Turkiye when both were competing against KSA.
It’s complicated [1]. My low-key guess is cutting off Pakistan was intended to send a message to Cairo.
> Already aligned with the UAE
Aligning. To my understanding there isn’t a treaty yet.
> the Pakistan aspect is overstated
Pakistan isn’t the cause. It’s the canary. These moves happening in quick succession (strategically, over the last year, and tactically, in the timing of these announcements) speaks to previous assumptions being fair to be questioned.
> My low-key guess is cutting off Pakistan was intended to send a message to Cairo
Abu Dhabi and Cairo have been misaligned for years since the Sudan Civil War began (UAE backs the RSF and KSA+Egypt back the Army) as well as the UAE backing Abiy Ahmed in Ethiopia at the expense of their traditional partner KSA.
> To my understanding there isn’t a treaty yet.
This is as close as it will get. New Delhi doesn't "sign" defense treaties unless pushed to a corner, because it reduces maneuverability.
The Pakistan-KSA alignment was already cooking after IK was overthrown. I think I mentioned it before on HN (need to find the post I wrote) but given the primacy Pakistan has had in US-Iran negotiations well before the war as well the PRC's increasingly miffed attitude at Pakistan following the CPEC attacks, the US most likely brokered a back-room realignment between PK and KSA.
A neutral-to-ambivalent India with a pro-America Pakistan is better for the US than a completely aligned India with a pro-China Pakistan.
India is doctrinally non-aligned (being a founding father of the Non-Aligned Movement), and the chance of a completely US-aligned India has always been zero. Even with Russia, its closest "ally" (only by a history of cooperation, not in any formal pact-ratified sense like Russia-China), it maintains only an arms-length relationship.
India is actually the true neutral major power. I don't really count Switzerland because it was obvious it would align with the EU/NATO/US axis when things got hot, as it did in the context of Ukraine-Russia.
Yep. There's nothing wrong with that, but it means US-India relations tend to remain fairly transactional while allowing both autonomy from a strategic standpoint, such as India signing a RELOS with Russia and Pakistan under Munir returning to the American fold at the expense of the Chinese.
OPEC has long been Saudi Arabia reducing output, and everyone else selling everything they can. They haven't had much power since the 1970s, but that they exist means they are a threat that if everyone else actually stuck to the agreement for a change.
This is the common problem for cartels: everyone has inventive to cheat on the deals made. By selling a little more than your share you get more money, while because everyone else is following along the prices are higher. (see also prisoners dilemma)
Repeated PD is very different. The whole point of a cartel is that everyone inside is incentivized not to cheat, and it works as long as they agree on what's fair. The problem for cartels is people not in the cartel.
Tangent but: this is also why reducing greenhouse gas emissions is hard.
As long as fossil fuels remain one of the cheapest easiest to scale ways to make power, there’s a similar incentive to cheat. If everyone else cuts emissions and you don’t, your margins are higher and you can undercut them. Global reductions require an all-cooperate scenario.
Developing nations have the strongest incentive to cheat since they need those margins to catch up.
Which is why I think little progress will be made until other sources are actually cheaper. Until then it’s beyond us politically. We can’t get all nations across the world to simultaneously cooperate at that scale.
> As long as fossil fuels remain one of the cheapest easiest to scale ways to make power, there’s a similar incentive to cheat. If everyone else cuts emissions and you don’t, your margins are higher and you can undercut them. Global reductions require an all-cooperate scenario.
IMO economics always wins. You're never going to see an all-cooperate scenario.
You will see an all-compete scenario, so constantly reducing costs for alternatives is key but you also have to find a way to ensure that the producers can win economically too. This is the conundrum.
If solar panels get cheap enough to create high demand, then that demand has to carry through the process of manufacturing, installing and maintenance. Every time I read that solar has gotten even cheaper, I start calling for quotes to install them at my house and the prices are borderline obscene. Same for geothermal last time I needed to update my HVAC.
I want solar and geothermal to work but the economics are a challenge.
Keep in mind if you are in the US, your prices have been artificially raised by tariffs. 30% starting in 2018, then declining each year for a while to 15%. Those tariffs recently expired but when I searched I saw this article about new tariffs on certain countries solar as high as 123%.
All this to say, you calling a local company and getting quotes captures your price but that’s not quite the same as the global price.
Point being the US government is making them expensive for US consumers but that’s not true for global markets where they want to have energy independence. Solar is in fact very cheap these days.
Tariffs have little to do with install costs in the US. They were horrible before Trump, and aren't much worse today.
The equipment is nearly free compared to the labor to install it. At least the last time I checked. I could do my own DIY system for about 1/4th the cost of one "professionally" installed - and I use the scare quotes for good reason. Most of the installation companies for residential solar exist to sell financing, the solar bit is just an unfortunate tertiary (behind grifting on the green energy credits/tax rebates) concern for most of them.
Panels costing an extra 65% is a rounding error for me. I'd need a whole lot more real estate to put them on for it to become a significant fraction of the total system cost.
And that might even STILL be okay if the quality of engineering and workmanship was decent and available. I'd pay the going rate tomorrow if I could find a highly competent electrician/company to do the over-engineered setup I want today. I'm not interested in saving money - I could care less if it ever pencils out. I'm interested in having a system that can survive a lengthy grid outage situation that is fully redundant and properly engineered to industrial level standards. This is effectively impossible in the US, but friends in other areas of the world have had similar setups installed for years.
In Europe you get about 1000kWh a year from 1000kW of solar panel
A plug in solar panel and microinverter at the local supermarket is about €1k/kW. 9kW of solar for €9k/£8k/$10.5k to power an average US car and an average US house.
Avearge US car does 13,000 miles a year needs about 4,500kWh, so €4500
An average US home uses 11kWh a day, or 4,000 kWh a year, that would be another €4000
US electric price is an average 17c per kWh. That's a 15% ROI.
I suspect the costs your quoting are mainly things like scaffolding and labour, and that's not going to get cheaper.
The panels themselves - ignoring inverter, install, etc, are $100 for a 400W panel [0]. To generate a whopping 16,000kWh a year -- 70% more than the average -- you'd need to spend $4k on panels. Even if panels were free, your quotes would still be obscene because tradesmen charge obscene amounts (or rather roofing work is just expensive)
> In Europe you get about 1000kWh a year from 1000kW of solar panel
Typo, 1000kWh from 1kW of solar panel.
I got my 4x 455W panels for 70€ each from BayWa (random vendor in Germany), plus delivery. Microinverter ~200€. Aluminium etc for installation ~400€ or so. I installed them together with a friend. Total cost ~900€ or so. At 30ct/kWh in Germany, break even is in 3 years. Would be earlier if I had a better roof to put them on, mine has some shadow.
Agreed - the good news is, in many circumstances renewable energy is cheaper for new energy capacity. As long as regulations move in the right direction, we are likely to see the global energy mix move towards renewable sources over time
Not only is the renewable energy cheaper, it also raises energy independence, which turns out to be quite relevant in today's world.
Furthermore, it also reduces the drain on the (often very fragile, for thirld world countries) foreign reserves, especially relevant when the oil prices fluctuate wildly.
If your solar panels are old and you don't have money to replace them, you get slightly less electricity. If you are out of gasoline/diesel and you have no money to buy it, you have a big, big, problem.
This is exactly why I don't think it's a huge risk to be reliant on China for solar panels. If relations between your country and China go bad, it can't be that much of an emergency when they stop exporting them to you. All the panels you already bought still work!
Unless there is some hidden cybersecurity risk of them shutting off panels remotely?
Yes, exactly. The panel's control system is connected to the Internet and there's an app that an attacker could take advantage of to interfere with critical infrastructure at an inopportune time.
If you are doing grid-scale installation, surely you would want your own control system (perhaps also on your own network, separated from the general internet), precisely in order to protect the grid.
There’s always the issue that it might be hard to find competent people that can implement a control network isolated from the internet if it has an internet connection by default.
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.
So little political will is needed at this point as the economics now favor renewables. Unfortunately most of the political will seems to be leaning towards protecting the more expensive fossil fuel sources of energy.
Renewables (particularly solar) already are cheaper [1].
It's political will not economics that keeps us addicted to fossil fuels. Nobody gets rich from solar panels. You build them. They produce power. Oil wells like any mine are huge wealth concentrators. That's the real problem.
If anything, a bunch of countries (particularly those who are net oil importers) are re-evaluting their energy dependence given that the compact that the US will guarantee maritime transport has essentially been broken.
I don't know where this idea that OPEC is toothless came from but it's objectively incorrect. Counter example: OPEC was the single largest factor in the inflation shock of 2020-2022. And nobody talks about it.
In March 2020 at the start of the pandemic, it looked like the world economy would come to a standstill. Oil futures went into extreme contango, briefly going negative as nobody was taking delivery. So in April 2020 the Trump administration went and browbeat all the OPEC+ members to massively slash production [1][2][3]. Art of the deal. This culminated in a 2 year deal to cut production by initially 9.7Mbpd (million barrels per day) and then reducing over the 2 year period [4]. This was a disaster.
For context, OPEC does this sort of thing by themselves without any kind of prompting when necessary. They meet every 3 months and project demand and then set production targets to maintain a floor and ceiling for oil prices. Individual members can and do cheat, producing more than their allocation and lying about production cuts but all in all the system mostly works.
Trump loses the election. Biden comes in and demand rockets back in 2021 and crude oil prices skyrocket, as do gas prices as a result. The Biden admin quietly went to MBS to ask him to end the deal. He refused. You can overlay this 2 year deal with global inflation and it pretty much matches up exactly.
So Republicans blamed inflation on Biden even though it was a Trump deal. The Democrats didn't abandon US foreign policy and publicly hang out an ally to dry so instead just blamed greedy oil companies for price gouging. And nobody at all mentioned the 2020 OPEC deal. Not in mainstream politics anyway.
That was a 10% cut in global supply and look what it did to inflation. Closing the Strait cuts global supply by 20%. In 1973 with the Arab oil embargo, the major recessionary effects took 6 months to really hit. This is a ticking time bomb that will likely explode leading into the midterms.
This is interesting and under-reported. But it doesn't mean that oil would've spiked a lot less without the OPEC cuts, and that's not the same as gasoline costs which depend on refineries too.
Um, how do you figure? You realize that was a 10% cut in global oil supply, right? Of course it's going to spike crude oil prices. It's almost like the US completely stopped producing oil for 2 year (13M vs 9.7M).
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.
Isn't the solution in game theory when there are multiple turns to just repeat the move the previous person made.
So if the other side overpumped by x1 amount then you pump an extra x1 the next turn / year (maybe multiplied some reference production factor as they don't all have the same absolute limits).
Simple game theory doesn't work in the real world. In the short term most OPEC+ members other than Saudi Arabia have very limited technical ability to significantly increase or decrease production. It's not like they have a big valve that they can open or close at will. For many oil wells, restricting flow would actually damage the geologic substrate. And drilling new wells (including all of the supporting infrastructure) can take years.
Tit for tat (start by cooperating, and for each subsequent choice do what your opponent did last turn) is the optimal for repeated 2-party prisoners' dilemma.
The real world is much more complex. OPEC is a multi-party game, for starters. For another thing, there are cascades of social/political problems that get in the way of optimal strategy at the level of nations. I.e. that only works if politicians are more interested in solving problems than controlling narratives or maintaining power. Unfortunately, an ineffective leader can be sustained by controlling the narrative, while an effective leader can be destroyed by lack of control over the narrative. And one of the best ways to control a narrative (especially if you aren't a very good leader to begin with) is to create so much chaos that it distracts from your shortcomings, and blame the chaos on enemies.
"My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, and my grandson is going to ride a camel". Sheikh Rashid bin Saeed Al Maktoum, the former Emir of Dubai.
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.
Their whole investment castle is built on sand (pun intended) and when oil even remotely starts to fade out as a commodity, it will crumble instantly. Panic will ensue and corruption will be rampant in order to continue the lavish consumerism. Everything will be sold for pennies. The difficult thing is not to make money once, it's to keep them afterwards.
A sovereign wealth fund with over $1 trillion USD (so with over $1 million per Emirati citizen) which invests heavily in U.S. equities will be sold for pennies?
So U.S. equities will be sold for pennies?
Are you predicting a U.S. stock market crash bigger than the Great Depression, when oil runs out?
Could be a sell off if it isn't managed...measured buy-backs scaled over a timeline that maybe offers them an opportunity to invest in other commodities may be preferable.
Actually now that I think about it...I should probably keep a pulse on ME holdings about 2 or so decades from now
Money retrained means nothing when cheap oil is gone. Cars are only a thing because we have volumes and energy for large supply chains and scale. A rich person can afford a model-T level car, but large parts of what makes a luxury car are things that they won't be able to get at any price without modern industry that is built on distributed wealth for many people. All the electronics - needs industry. Precision manufacturing - depends on precision electronics. You can't even rebuild a current design if someone thinks to print out the blueprints.
Of course who knows how to end of oil will happen. Best case is a switch to renewables (or fission...) in which case there will be more than enough expensive oil for a few rich people to drive expensive gas cars if they want to. There are lots of other options as well, only time will tell.
(and a nod here to the replies who suggest this was never actually said)
Petromonarchies invest a lot into alternative asset classes: semiconductor industry, logistics and shipping, power electric machines, biomedical development, etc. Renewables are in the list, too.
Most of those are things that depend on cheap energy [mostly oil] today. Only renewables do not, and it is questionable if we will transition fast enough to not collapse society for lack of energy (though this is looking good)
Retaining wealth is the easy part, retaining political power is hard. They don't want to be regular jetsetting billionaires, they want to rule their own domain. And in order to do that, they need to figure out how to make people want to keep living there.
Money solves a lot, but not everything. At the end of the day it's still a country in a desert. Unfortunately that entire region is a repeating history of temporary wealth and stability that gives way to instability. When that happens the underlying constraints can quickly reassert themselves. Just luck at the history of Kuwait.
The point of the line is not that they aren't going to try, it's an acknowledgement of the extreme challenge in diversifying in the short term and incentivizing the next generations who are very, very comfortable with the status quo to build other income streams in the long term.
Where is the Land Rover supposed to sit on this scale?
There are current Land Rovers with market positioning suggesting they're "better" than Mercedes, and there are historic Land Rovers which were arguably not much better than camels.
That's a quote. You may want to ask Sheikh Mohammed (current ruler of Dubai) for why his dad was mocking him for his choice of a car. I just posted the quote - felt relevant.
The US has long sought to erode OPEC’s ability to dictate global oil prices. The US has made massive progress in being broadly energy independent to isolate it from challenges elsewhere. The US has been a net energy exporter since 2019. Global oil pricing was always an annoying thorn in that strategy.
This is an initial but big crack in shaking up global oil markets in a way that meaningfully shifts global power dynamics.
They export because their own refineries along the Gulf coast esp were designed for middle east heavy crude cuz the US once upon a time believed it was about to run out of American light sweet crude. So the story is not black and white.
CAFE standards were always a stupid idea. If we want to reduce fuel usage then increase the tax on fuel instead of punishing manufacturers for selling vehicles that consumers want to buy.
This is, respectfully, corporate propaganda. Consumers buy the vehicles that are available and advertised. It's in the best interest of manufacturers to convince/compel consumers to buy larger, more expensive vehicles with higher margins, and that's exactly what they're doing.
How many CAFE compliant “light trucks” do you see around?
CAFE is a great example of a well-meaning regulation failing because the people who developed and approved it didn’t think through the obvious consequences.
How can that be if they all offer extensive lines of small and efficient cars that a good number of people drive? Besides, collusion doesn't seem likely given the amount of foreign competition. The majority of Americans have made it clear that they want bigger autos, at least with the usual gas prices. Sorry if that's corp propaganda.
Separately I've heard emissions laws blamed for large sedans losing to small SUVs and trucks due to double standards, but I doubt it would've made a difference, even though I personally prefer large sedans.
If gasoline is more expensive, customers will demand more efficient vehicles.
We aren't mindless zombies buying whatever we see on TV. I'm old enough to remember when Japanese small cars practically took over the market in the 70s and 80s due to gas price shocks. It can happen again.
If gasoline is expensive because of carbon taxes, people will vote for a party that tells them that climate change is not a problem, and that, if they win, gasoline will be cheap again.
They probably won't buy Honda Civics, but they (or their children, more realistically) might buy the electric equivalent of an F150 if the market produces one that can fulfill what they perceive their needs to be.
I just bought a (small, hybrid) truck because I need to do some truck stuff. I 100% would have bought an electric if the market produced one with comparable capability and competitive price, but we're not there yet, and I don't have Rivian money (yet! lol maybe someday).
My point being: there is still a huge demand for trucks from both a capability and culture standpoint, and very little supply of a cost-comparable product that doesn't take gas or diesel. Rivian is around double what most people want to pay, and the F150 Lightning was marketed poorly and had bad towing/hauling range compared to gas/diesel equivalents.
I'm not here to defend "truck culture" but I do believe that if you offer people a better product, they will figure it out and buy it. An electric truck with 400+ miles of towing range, an onboard 2kW+ inverter, 500 ft-lbs of torque, and fast charging for the same price as a comparable gas F150 will sell. Unfortunately the battery energy density and EV supply chain economies of scale aren't there yet in North America.
> 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.
Nah, it's not real. Your claim isn't supported by the data. Political advertising can help a bit at the margins but in the 2016 Presidential election the losing campaign spent about twice as much on advertising as the winner. Very few voters were swayed by last second radio ads.
(I would support a Constitutional amendment to restrict campaign contributions and effectively overturn the Citizens United v. FEC decision.)
Again, I don't want to get into a political slap fight here, I want to keep this on the subject of advertising.
It sounds to me like you're confusing the magnitude of advertising spending with effectiveness of advertising techniques.
Some people have found more effective ways to advertise to people, we know all this, it isn't uncharted conversation territory. We all know about micro-targetting based on personalized data, dominating certain niche mediums like AM radio to target people when they're driving and coordinated pushes with people in industry.
The point is that advertising works. It works disconcertingly well.
This is why people buy stupidly impractical automobiles that they don't need.
If you don't want to make this about politics, use a product advertising example instead of politics which is not even comparable.
Advertised products will sell more, but only to a certain point. Like someone who wants an SUV and knows nothing else might buy the one from Chevy instead of Mitsubishi because of advertising.
Whatever your standard is for an "efficient" vehicle, more efficient things than those 15-20mpg trucks or SUVs do exist in the US. Every automaker sells a serious car that gets at least 30mpg combined if gas-only, or like 50mpg if hybrid.
People want car insurance because it's a law, low-flow showerheads if water is expensive, and electric appliances if gas is expensive or outlawed. And some want fuel-inefficient vehicles because they like them and gasoline isn't very expensive, while plenty of other people opt for MPG.
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.
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
> This is a myth. Larger vehicles are not safer for their occupants; they merely feel that way.
I'm pretty sure it's not, because physics. A tank is safer than a bike for the poilot, when there is a collision. This data is a little muddled, but follows common sense.
Large SUVs and Pickups: These vehicles have the lowest occupant fatality rates, averaging 14 deaths per million registered vehicles for SUVs compared to 48 per million for sedans. Large luxury SUVs often register statistically zero deaths in specific three-year studies.
Nope, not a myth. While the data is noisy and there are some confounding factors, the IIHS driver death rates show a clear correlation between larger size and fewer deaths.
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.
Compare the Maverick to a Japanese kei trucks, they so impressed the current president that he signed an executive order allowing them, if they're manufactured in the US.
Good example of what they have in Japan right now.
The Maverick is quite sizable compared to the original Ford Ranger too, which was still bigger than the regular Japanese trucks that were all over the US after oil skyrocketed the first time:
Pedestrian deaths, including children, have risen in lockstep with light truck adoption in the United States, while they have fallen in countries without this phenomenon.
Vehicle emission and fuel efficiency standards are a great idea. The stupidity was allowing a "light truck" exception at all. It made the manufacturers turn to manufacturing and promoting what should be work vehicles to rich idiots who need nothing larger than a regular car (but can easily be upsold on something they don't need)
America is already fucked, given how awful its urban sprawl is. Trucks used for commuting and not haulage just makes it double fucked.
We shouldn't prohibit dumping toxic waste in the river, we should just tax it!
I am familiar with the EU situation. The carbon tax you would have needed to achieve the effect of fleet emission standards would have been political suicide.
And that is not just psychological. People who buy used cars and drive their cars until they fall apart are well correlated with people who can't afford high carbon tax. Buyers of new cars are the people who can. Carbon Tax would mean massive redistribution of the money raised. Yet another political mine field.
Not sure if you're facetious but there are plenty of examples of rising cigarettes' prices leading to reduction in smoking, or similarly a sugary soda tax reducing consumption of sugary soda (UK is a prime example).
Always gonna happen. Oil margins are gigantic and they'll use every dime of runway they can. Electric is better in every single way and batteries tech is only making that more true every day. The dinosaurs won't go quietly into the night.
I think the initial crack was ousting Maduro in Venezuela. Since OPEC exempts Venezuela from production caps, it gives the US government a lever on non US production.
Venezuela produces heavy "sour" crude (this means high in sulfur). Many of the US refineries capable of handling sour crude have closed, partly because the sulfur content makes the refineries stink (and emit lots of pollution) and partly because they need more expensive piping to handle the corrosive materials (not just the crude, but HF acid that's used in the refining process).
The last refinery to be built in the US opened in the 1970s. Since then, refineries have closed. None of the owners of refineries will sell them because of SuperFund legislation. It is the same reason that when a gas station is sold, the fuel tanks are dug up and replaced. This way, there's no way to claim that the previous owner left hazardous material to be cleaned up. SuperFund laws say that every previous owner is liable for the cost of cleanup. It doesn't matter how long ago the property was sold.
This is horrible from POV of mitigating the climate catastrophe and the global death toll. We (as in humanity) are really late in ramping down fossils production and use.
Eh if the U.S. gets into a forever war with Iran the same way we did with Iraq and Afghanistan and Vietnam (or like how Russia got into one with Afghanistan and Ukraine), the climate crisis is solved. Five years of the Straight of Hormuz being closed and everybody will be using EVs.
Legislation isn't going to work. Economics isn't going to work. War - which cuts off the flow of petroleum because nobody is willing to risk their life for oil - will work very quickly. Nothing quite like a shortage to spur innovation.
80% of the world's oil is not going through the straight at all. 5 years is still optimistic. Esp if we are starting wars to pump up the futures market
Doesn't take a huge decrease in production to result in a huge increase in price, due to inelasticity in demand.
Renewables and EVs are a capital-intensive industry, and the thing about capital-intensive industries is that they're prone to bubbles. If you get a year or so of EVs being cheaper than gas cars, you will see a huge growth in sales as lots of consumers make the rational choice all at once. The spike in sales will spur a bubble in capital investment as investors all rush to capitalize on it. The capital investment spurs R&D, which results in technological improvements which make the cost advantage permanent.
At the end of the 5 years (or perhaps even before) the price of oil will crash back down, probably lower than it is now, as increased EV adoption destroys demand more than supply was choked off. But at that point we'll all own EVs, they will cost less than gas cars, there will be chargers everywhere, there will be solar panels everywhere, and we'll have better batteries and V2H charging.
The US isn't insulated from global oil supply shocks because crude oil and refined petroleum products are traded on global markets and natural gas is somewhat traded on global markets (there are limits to LNG exports).
So yes the US could limit or ban exports. Many countries (including China) have done this in a kind of energy nationalism, but that hangs out allies to dry in a way that would make the US deeply uncomfortable. It would threaten European energy security. It would come at the cost of Latin American exports. So there's a cost to pay.
And more to the point, no US government regardless of party is going to hurt corporate profits by limiting exports. Biden could've done it in 2021-2022 and didn't. And Trump certainly won't. As one example, a big release from the SPR was on an oil-for-oil basis. Rather than cash ii on high prices, it's just a massive gift to oil companies who have to repay the oil (and then some) at some unspecified future point when oil will be cheaper. That's billions the US could've added to government coffers.
I do agree there is a power shift going on but not because of US energy independence. No, it's because the US cannot militarily protect GCC countries and cannot force open the Strait of Hormuz or guarantee global shipping, which has essentially been a US guarantee since 1945.
I do think this administration does want to crack OPEC but that's likely to be of massive benefit to China without China having to do anything.
Global pricing affects all fossil fuels and always will. Energy independence will remain a fantasy until we are fully on renewables. Which is entirely within reach and requires fighting zero wars.
...and up to that point, first world countries should not be complaining about developing nations using coal. It's a lot more shock resistant than diesel and natural gas, which is especially important for those that are so much more sensitive to inflation. From what I've seen coal, solar (hydro too, but that's land-dependent) and micromobility are save harbors. Not much they can do about the fertilizer shortfalls though.
When it comes to fossil fuels, there's no such thing as 'energy independence' because fossil fuels are traded on a global market. In addition, not all oil is the same. So you have to trade it because what you can extract may not be what is useful to you, but useful to someone else.
In short, the US cannot functionally be independent on fossil fuels even if we extracted every drop of oil within our borders--because we literally cannot use all of it, and most of it would be wasted just sitting around.
In extreme scenarios it is certainly possible for the US to ban exports of certain fossil fuels, effectively making an internal US market that is isolated from the rest of the world and basically energy independent.
Yes, we would need to build more refining capacity to use it all effectively, but in a cataclysmic event (i.e. a world war or something) the US would be much much better off than most other countries.
That makes no sense at all. We just had a post about several countries with energy independence who had done it with zero extractable resources. For them, the magic key was having tons of hydro and a small population. They just stopped importing. Countries like the US will need a lot more power and a lot more diversity of generation but it can be done if there was enough will to do it.
China is making great strides in renewables and investing in nuclear (and in electrification of transport). It can be energy independent in not too distant future.
India has geography for solar, and the human/industrial capability for nuclear.
Southern Europe can go solar as well.
Northern Europe has it tougher (except Norway, with its abundant hydro). Nuclear could work. Or long range DC cables from South Europe or North Africa (if ever Europe helps them to put their act together - not easy or fast, but definitely in their best interest).
Central/Eastern Europe is rather into nuclear (Austria on renewables) and not too heavy on fossil, exceptions being Poland/Czechs/Germany with too much coal.
The Balkans are quite fossil-heavy, but solar should be quite feasible there.
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.
If foreign supply is cut, the price goes up for everybody everywhere. Even net exporters. That's the whole point of this thread. Every drop of oil, gas or coal extracted (and not under sanction) will be sold to the highest bidder anywhere in the world.
Geopolic: A US-aligned Gulf state walking away from a Saudi/Russia-led bloc in the middle of a war, after deciding the bloc didn’t really have its back
Economic: it weakens OPEC’s pricing power in a way you might not see right away if Hormuz is closed, but it could really change the supply picture once things reopen
UAE announced this week they might start selling oil in yuan so this doesn’t read like anything US aligned to me. If anything it reads like the opposite to me - a move away from traditional opec petrodollar system
I don't think there is any evidence that they actually need the dollar swap line - the dirham-dollar peg isn't at any risk and they have plenty of money for fiscal flexibility going into the foreseeable future. If you take financial reasons off of the table then it is clear it is just a political play for a bigger seat at the table with the US.
The Saudis did it to Biden in 2023, the UAE sees the opportunity to do it to Trump now.
They need the dollars because they're an import-oriented economy, almost all of which are conducted in dollars (nobody wants their dirhams because oil is priced in dollars anyways). Dollars are also useful for their sovereign funds to invest into the US, either in the stock market, or in private equity.
What happened this week - they announced they might start selling in yuan, they left the OPEC, and they started a new wealth fund to invest exclusively in China. That gives them an alternative for the dollar-peg since China is their biggest import partner anyways, while also giving their surplus yuan an alternative channel of investment into China.
Still they need the dollar-swap for the essentials - food from India and Pakistan, neither of which will accept their dirhams unless they get exclusive deals (which are not allowed in OPEC). It helps for them that India and Pakistan need lots of oil, and that a dollar peg benefits the UAE more than it does either nation. If the EU plays a greater role in trade, particularly in defence and maritime manufacturing, they will stockpile euros too, to the detriment of the dollar.
Still, they also bought some prime DC acreage to expand their US diplomatic corps, and will likely keep the Washington connection, so long as AI is perceived as useful. Right now, that's the only major export benefit the US provides the Gulf countries. This is them just hedging their bets.
At last report (Feb 2026) the UAE had ~$250b in foreign currency reserves. They have plenty of non-AED currency.
The Yuan is the current bogeyman the Gulf States use when they want attention from the US (not that they’re not diversifying, just that it isn’t a structural shift in a meaningful way). The UAE is making this play right now to make sure they are part of the conversation in deciding how things with Iran end and making sure their influence is sustained after the current administration.
The wealth fund is a way to deploy whatever yuan they receive while gaining political favor with China as well.
exactly. this sounds like a third path where the UAE charts its own course, and that course increasingly looks paved in Yuan.
OPEC cartel membership didnt gain it access to Hormuz, and the US petrodollar promise to protect UAE states from aggression in exchange for trade in USD could not be upheld.
> the US petrodollar promise to protect UAE states from aggression in exchange for trade in USD could not be upheld
Well the war is still ongoing, and Iran's regime is already feeling the pain of the blockade [1]. Pricing oil in Yuan because, I guess, the US is somehow not protecting the UAE doesn't make sense because China won't be there to protect them either. The US can just say, well fine you can sell your oil in Yuan. But we'll just blockade the Straight and seize oil priced in Yuan or something. Who exactly does the UAE need protection from? Iran? China's ally?
I swear I read this same story over and over again. There's always just an accusation "thing happened, here's how the US is now in a state of being screwed" and there's just never any follow-up or perhaps imagination that the US could just do something too. Hypersonic missiles? US Navy is done for, no possible counter. Iran has drones? Boom. US is done for no way they can spend Patriot missile money on $30,000 Iranian drones. Nope, nothing anyone can do at all. Iran "closes the Straight", well the US can't do anything. Now they are "embarrassed" and "slammed".
> OPEC cartel membership didnt gain it access to Hormuz
> Pricing oil in Yuan because, I guess, the US is somehow not protecting the UAE doesn't make sense because China won't be there to protect them either.
It is an admission that US protection was always a paper tiger. Perhaps in the 1960s it meant something, but Iran has shattered the illusion that Washington has any credible defense of the country.
> The US can just say, well fine you can sell your oil in Yuan. But we'll just blockade the Straight and seize oil priced in Yuan or something.
The UAE primarily sells its oil to China, which is its largest export partner, followed by countries like India and Japan. the United States cannot do this without not only obliterating energy markets for an ally, but strengthening alliances between china and india. It is likely that should the US attempt such a move, China would respond with retaliatory technology tariffs and a reduction of agricultural trade.
> Who exactly does the UAE need protection from? Iran? China's ally?
the UAE did not "need protection" from any regional military threat until the United States used regional peace talks as cover to launch a surprise attack against Iran. the UAE would still likely be an OPEC member state had the US not unilaterally chosen to obliterate global energy markets for no consistent or clearly defined reason.
> there's just never any follow-up or perhaps imagination that the US could just do something too.
This conflict was well defined as geopolitical suicide for nearly forty years; its what kept the peace. All simulations and tabletop exercises predicted such an incursion would send global energy markets into panic, trade markets into recession, and produce no meaningful advancement of either regional security or regime change. Iran is backed by powerful allies and has shown numerous times it can meet each US escalation with yet more regional attacks. We have tried escalation and failed, burned through a decade of advanced missiles fighting cheap drones, and have no defined objective politically or militarily for this conflict.
> It is an admission that US protection was always a paper tiger. Perhaps in the 1960s it meant something, but Iran has shattered the illusion that Washington has any credible defense of the country.
sigh No, it's not. There are 3 aircraft carriers parked in the region, plus US air bases. Iran launched over 2500 missiles at the UAE alone. The US destroyed much of Iran's military, the only thing they have left is the ability to launch missiles and drones at ships or do terrorist style attacks.
But if you want to suggest that the US is a paper tiger here, that just makes everyone a paper tiger. Nobody can stop Iran. Ok.
> The UAE primarily sells its oil to China, which is its largest export partner, followed by countries like India and Japan. the United States cannot do this without not only obliterating energy markets for an ally, but strengthening alliances between china and india. It is likely that should the US attempt such a move, China would respond with retaliatory technology tariffs and a reduction of agricultural trade.
Then we would react with export controls, additional weapons shipments to allies in the region, work with Japan and South Korea to start weapons programs, blockade Chinese trade, there's a million things we can do too.
> the UAE did not "need protection" from any regional military threat until the United States used regional peace talks as cover to launch a surprise attack against Iran. the UAE would still likely be an OPEC member state had the US not unilaterally chosen to obliterate global energy markets for no consistent or clearly defined reason.
And yet, UAE wants the US in the region and in UAE soil. Iran launched over 2500 missiles at the UAE, including civilian targets. Not sure your comment here reflects reality.
> This conflict was well defined as geopolitical suicide for nearly forty years; its what kept the peace.
Things change. US is the #1 energy producing country in the world in terms of oil, gas, &c. We're less dependent on the Middle East, plus we've basically secured the Venezuelan oil supply. Seems to me that what was once geopolitical suicide is no longer the case. We're here today, and life in the US just goes on as normal.
> All simulations and tabletop exercises predicted such an incursion would send global energy markets into panic, trade markets into recession, and produce no meaningful advancement of either regional security or regime change.
TBD
> Iran is backed by powerful allies and has shown numerous times it can meet each US escalation with yet more regional attacks.
Yes, Iran, who is supplying Russia with drones and such for its war against Ukraine is an ally, as is China.
> We have tried escalation and failed, burned through a decade of advanced missiles fighting cheap drones, and have no defined objective politically or militarily for this conflict.
We have not burned through a decade of advanced missiles fighting cheap drones. We can build our own cheap drones and are working on scaling production, and just because you don't understand the political or military objective doesn't mean that there isn't one, however poorly or well-thought it may be.
The US has very much escalated and sits now at the top of the escalation ladder. Iran has been trying to get the US to the negotiating table due to the blockade. Iran can launch its missiles as it likes to at civilian targets in the Gulf. We + allies will just get better at shooting them down. Who cares? If Iran wants to try to escalate we'll just escalate further, blow up more stuff, keep the oil from flowing if we decide. It doesn't really hurt us much.
people tend to forget the exorbitant privillege of the US. originally this idea applied to USD being the global reserve currency. but it goes so much further. critics of american foreign policy simply lack a sense of proportion. there is so, so much leverage the US has. which they use to do things that wouldn't make sense for any other country. while still coming out on top. i'm glad to see specifics being provided in support of this idea
"Strait" refers to something which is narrow, especially at sea. It can be pluralised as "Straits" in many cases. "Straitjacket" also comes from this root.
"Straight" refers to something which is not curved. The "gh" used to be pronounced and still is in some parts of Scotland.
> Iran "closes the Straight", well the US can't do anything.
Well, Iran closed the Straight and the world is facing biggest oil crises since 90ties. US was in fact incapable to prevent it. Even if the Straight opened today, harm already happened and will continue to happen for months. And I dont think it will open today.
The war did not had to start at all and is causing considerable harm already. Iran feeling pain does not mean surrounding states were protected - instead they were put into harms way.
> Pricing oil in Yuan because, I guess, the US is somehow not protecting the UAE doesn't make sense because China won't be there to protect them either.
At this point, China is more predictable and crucially, more likely to keep their word. Not exactly entirely predictable and not exactly truth teller, but the difference here is huge.
> The war did not had to start at all and is causing considerable harm already. Iran feeling pain does not mean surrounding states were protected - instead they were put into harms way.
They were always in harm's way. The war could have waited, and Iran could have doubled or tripled its missile stockpile and then they really would have been in harm's way. You're falling in to the same trap I mentioned "country does X, end of analysis".
> Well, Iran closed the Straight and the world is facing biggest oil crises since 90ties. US was in fact incapable to prevent it.
Any country is incapable of preventing it then. Iran could always just mine the straight and threaten to launch missiles and go hide in the mountains. If Iran wasn't doing all of these awful things in the region, none of this would be happening.
> They were always in harm's way. The war could have waited, and Iran could have doubled or tripled its missile stockpile and then they really would have been in harm's way.
I keep hearing this line defending US intervention but it doesn't really make sense. Iran was not threatening shipping traffic in the strait regardless of how many missiles they stocked up until they were forced to do so as an asymmetric warfare response to an attack by a superior military.
The missing ingredient has never been how many missiles Iran has stockpiled, it was external military action from someone like the US that gave them the window to assert that control.
The US didn't do the world any favors by getting it out of the way sooner or something, that's just absurd apoligism for a poorly planned war of choice that has obviously been a net negative for basically the entire world.
It would be like if the US nuked China and then shrugged after they predictably retaliated saying it just proved the threat from their stockpile that had always existed.
> I keep hearing this line defending US intervention but it doesn't really make sense. Iran was not threatening shipping traffic in the strait regardless of how many missiles they stocked up until they were forced to do so as an asymmetric warfare response to an attack by a superior military.
Why would they threaten to do so prior to being ready? Have you ever played a strategy game where you build up your forces for an advantageous offensive or defensive position? Countries do this too. If we were playing a game where my actions would provide some advantage or victory over you in some area or a broad area, why would I announce what my intentions were to you so you could react or anticipate my actions?
Separately, you can just ask: why are they even stockpiling missiles in the first place? Why isn't Singapore stockpiling missiles, or perhaps Portugal, or Panama, or Morocco? Of course, this then introduces the circular reasoning "because of a potential US attack", but of course if Iran wasn't funding Hamas, Hezbollah, Houthis, and more, building up these missile stockpiles, continuing to pursue a nuclear bomb, helping Russia with its invasion of Ukraine, we wouldn't be here. At some point you just have to look at their actions and their actions suggest implementing a plan.
> The missing ingredient has never been how many missiles Iran has stockpiled, it was external military action from someone like the US that gave them the window to assert that control.
They don't have control over the Straight of Hormuz. It's a bit of semantics, but control would mean they can allow or disallow ships to pass based on their own decision making. They can disallow ships, but the US can also disallow ships. If Iran controls the Straight of Hormuz because they can fire missiles at ships, the US also controls the Straight of Hormuz because of that very same capability.
> Of course, this then introduces the circular reasoning "because of a potential US attack", but of course if Iran wasn't funding Hamas, Hezbollah, Houthis
I think the first step of thinking about war objectively is to consider how each side sees it. The US POV is no less circular, from Iran’s perspective - they could list any number of provocations from the US to justify arming themselves, none more obvious than the war itself.
The debate around who started the hostility is ultimately pointless, the question is what to do about. Ideally the answer isn’t “arm for obliteration because the other side started it”
So let's say Iran stops building up massive amounts of missiles, funding these terrorist groups, stops pursuing a nuclear weapon, stops mass killing of its own civilians, and stops helping Russia prosecute its war against Ukraine (we can even leave this optional just to not introduce additional complexities).
What will the United States now have to do on its side as it pertains to Iran?
are you implying that the US share in the hostilities is only direct military intervention? because that's not correct. through their alliances, they are additionally responsible for more
It is not a game. And this war happened because Israel and USA assumed Iran is weak.
This had squat zero with acute danger of military buildup. This happened because Hegseth thought Iran will fold and found it super unfair they did not.
> Separately, you can just ask: why are they even stockpiling missiles in the first place?
To protect themselves when America starta Another war. It cant go without war for long. As brutal as iran is, there was no imminent threat of expansion
It is israel who just displaced millions of people.
Is the idea here that only USA gets to have missiles?
Iran is weak compared to the United States. The war wasn't started because Iran is weak, it was started because Iran is engaging in various activities that have effects in the world that the United States finds unacceptable.
> To protect themselves when America starta Another war.
Yet, only Iran has to protect themselves. Why is that? Well it's because they're doing bad things, and they know that we may do something about it. Why isn't Peru stockpiling missiles, or Thailand, or Iceland? It's because Iran's government was seized by an authoritarian regime that hates America and decided we would be the enemy forever and has continued to attack, and take other violent or non-violent actions that destabilize the region and global trade. If they just stopped doing this stuff, there wouldn't be a reason to "attack".
> It is israel who just displaced millions of people.
I don't think so. But Iran is responsible for Syria and those millions of people too. Like Maduro is responsible for the 8 million + refugees from Venezuela.
Your point of view of the world does not match reality. Stop making excuses and defending brutal authoritarian dictatorships.
> Is the idea here that only USA gets to have missiles?
Well you believe in nuclear non-proliferation, right?
> Stop making excuses and defending brutal authoritarian dictatorships.
this style of argument really falls flat in 2026 tho. at least for a global audience. it seems you don't appreciate how much america's image as a champion in good faith of freedom, democracy and prosperity has been shattered. not least because the old neoliberal guard has been busy undermining it (see carney's speech at WEF, where he started by pointing out that not only was the rules based order a lie, but that it is no longer acceptable to pretend otherwise). but now also because US aggression is perceived as directly responsible for the global energy crisis, which is affecting everyone else. america simply doesn't have a high horse to get on anymore
Those states could export oil entirely reliable. They had tourism and finance industries dependent on them being safe.
Iran did not mined strait until USA and Israel bombed it twice during negotiations, threatened civilisation destruction, murdered political leaders and attacked BOTH civilian and military infrastructure.
You dont get to start a war or bomb and then blame the other side for not passivele accepting the situation.
Iran threatens to erase Israel and the United States off the map pretty much daily. So I just don't care that Trump did the same back to them. If they don't like threats like that, perhaps they should stop issuing them yea?
> murdered political leaders and attacked BOTH civilian and military infrastructure
What civilian infrastructure was deliberately attacked? We do know that Iran deliberately attacked civilian and military infrastructure. Did you mix the two up?
> You dont get to start a war or bomb and then blame the other side for not passivele accepting the situation.
Who started the war isn't an easy question to answer. I can easily and obviously argue that Iran started the war when they attacked Israel through their proxy forces. Ultimately though who "started" the war doesn't matter that much. Both sides have had grievances for quite a long time and things are just finally coming to more direct conflict.
> What civilian infrastructure was deliberately attacked?
Its clear you have only been getting your information from a certain set of sources. a lot of civilian infrastructure has been destroyed in Iran.
One of Israel's goals is to cripple the economy of Iran.
"Israeli leaders, including Defense Minister Israel Katz, have ordered the military to carry out strikes on targets that cause economic blows to the Iranian regime."
"This included a strike on major Iranian gas infrastructure in the country’s south nearly two weeks ago, and strikes on two of Iran’s largest steel factories on Friday. "
"Missiles also struck one of Iran’s biggest state-run pharmaceutical companies, Tofigh Darou, destroying its production and research and development units, state media said on Tuesday, blaming the strike on Israel. It’s a major producer of anti-cancer drugs and anesthetic in Iran"
"A century-old medical research centre (Pasteur Institute) set up to fight infectious diseases like plague and smallpox has been heavily damaged in strikes on Tehran"
In addition, one of my friends who lives in Iran reported that a dialysis center, a refrigerator factory, a public park (that had "police" in the name),
a popular chicken restaurant, and an entire apartment building full of people were each separately targeted and destroyed (apartment building was double tapped,
killing rescue workers)
the above is just a small selection, universities, factories, bridges, oil infra has all been targeted as well.
would you consider US Steel factories, universities that do research for the military, factories or companies that make components that go into US weapons, apartment buildings where one military leader lives as military or civilian infrastructure?
true, but there's some evidence that was unintentional. whereas Trump and Israel are openly saying they are targeting bridges, oil
infra, economic targets etc.
>Well, Iran closed the Straight and the world is facing biggest oil crises since 90ties. US was in fact incapable to prevent it. Even if the Straight opened today, harm already happened and will continue to happen for months. And I dont think it will open today.
Adjusted for inflation the price of oil isn't even the highest it's been this decade, let alone historically.
The price tripled from 2003-2008 as well.
>The war did not had to start at all
We probably won't know for twenty years if that's true or not. It's not as Iran's been some peaceful country for the last twenty years, they actively have sponsored terrorist organizations with the purpose of destabilizing the region. The country also sits on a wealth of natural resources but was solely researching nuclear power for peaceful purposes.
Really the big lesson for the next superpower is to simply act earlier. If you don't care about winning and just being a thorn in everyone's side, ballistic missiles are a great investment, and it should have been taken more seriously when Iran started stockpiling thousands of them.
> Adjusted for inflation the price of oil isn't even the highest it's been this decade, let alone historically.
I dont think UAE cares about American oil prices that much. Nor does Europe nor does Asia. That just meand America is less motivated to solve clusterfuck it created.
And yes, it is huge issue already. With flies cancelled for summer, with strategic reserves already being used, with homeschool and home office in some countries, shorted workweek in others, factories producing less.
> We probably won't know for twenty years if that's true or not.
We do know that. There was no urgent reason to start badly prepared war. And no involved country is peaceful.
> The country also sits on a wealth of natural resources but was solely researching nuclear power for peaceful purposes.
It was entirely legal for them, because literally USA teared down agreement to do the opposite.
And what everybody knows now is that the only way to be safe from aggression is to have nuclear.
Yea there is some truth to that. The US is still in a wartime economy and cultural mode of thinking post-WWII (military budget, highway and infrastructure build, cultural characteristics around guns [1] and such). The downside is the degradation of quality of life, rage-bait, stress, those sorts of things. But if we have Americans constantly freaking out (and to some extent they should - being #1 is tough) about Chyna that does put pressure on the government to take these concerns seriously if they previously were not.
[1] Not a 2nd Amendment criticism, I’m a strong supporter. More so the folks who load up on ammo and “cool” gear and all that stuff.
Im not concerned with them selling with the yuan as China regularly screws around with its currency. The bigger issue is and other currencies which reduces the US impact.
On the backside I’m sure there will be lots of fun back door deals around all those interceptors and future anti drone technologies. Today though the US has been the impetus of a lot of the current issues.
They kind of are. Iran has been attacking everyone in the Middle East for decades, occasionally seizing or destroying ships in Hormuz, and funding internal dissent. Things are worse right now, but not that much worse, and the short-term pain might very well be worth it for the long-term reduction in Iran's capabilities.
Uh, from the UAE's perspective it is much worse. They sold many $Bs worth of oil and had become a global tourist hub, now they can't do those things. They are being patient for the time being but there's a limit. We don't know what that limit is but if 6 months go by and the Strait's not open can we really expect them to not pay Iran a toll and price their oil in yuan?
What are you talking about? This level of escalation hasn’t happened for at least a quarter century. I know, because I’ve lived in the gulf for large parts of that period
Has the GCC been in an existential state of panic to the point where they’re seriously questioning their relationship with the US any time in the past 30 years?
Kuwait was “saved” by the US. The Iraq invasion was approved by the GCC, partly as payback for Kuwait, and anyways Iraq is not part of the GCC. The Qatar blockade was self-inflicted (and extremely stupid).
That doesn't mean the warnings were frivolous. There was ultimately a change in course which averted it. How sure are you that will be the case this time?
My guess is that is this because UAE has ports on the other side of Hormuz and doesn't want to be restricted in their usage by OPEC? Does this mean UAE thinks Hormuz will be a problem for a long time? And what does it mean for oil prices long term?
> My guess is that is this because UAE has ports on the other side of Hormuz and doesn't want to be restricted in their usage by OPEC?
Does OPEC limit that? It would be very surprising to me if they did, as the point of opec is only to limit production when oil prices are low. They aren't low right now.
The UAE has the ADCOP (Abu Dhabi Cross Oil Pipeline) to move oil to beyond the Strait. It has a capacity of ~1.8Mbpd (million barrels per day) so is only a fraction of the UAE's total oil exports and a tiny fraction of the oil exports impacted by the Strait being closed. It's also being used already. I don't know how these particular oil exports have been impacted. They are beyond the Strait but not by that much. Iran is still entirely capable of harassing shipping there.
I believe the US has given tacit approval or is behind this move entirely for what comes when the Strait inevitably reopens and that is to get the UAE to export well beyond what they might otherwise as an OPEC member.
The UAE like most GCC countries is entirely dependent on US arms to maintain their regime so I simply cannot imagine them doing this without the US putting them up to it or looking the other way.
It also looks fairly easy to mine/blockade outside of their territorial waters. You don’t need that many drones to make the whole area unusable for marine transport. The strait is the clearest choke point but I don’t know how much bypassing it would help UAE
As democratic popular opinion turns against classical liberal economic principles, many theocratic or monarchist hell holes are increasingly becoming the unexpected underdog turned winners in economic freedom. It's been fascinating to watch.
My understanding is that unique historical, cultural, and even geographical factors have led to this outcome for Oman. I would encourage you to read up on the history of the country to understand the nuance here and not paint with such a broad brush.
Everyone has a unique "..." and a nuance here and a nuance there.
UAE has a unique yada yada and also ended up with a surprisingly remarkably free economic index despite being a theocratic monarchy.
As did the monarchy Lichtenstein, British controlled Hong Kong, and the one-party state of Singapore (technically democratic, in practice it functions like a recallable monarchy).
Also of note the three richest countries by GDP PPP per capita are Monaco (hybrid monarchy with monarchist veto powers), Lichtenstein (hybrid monarchy with monarchist veto powers), Singapore (single party state).
> one-party state of Singapore (technically democratic, in practice it functions like a recallable monarchy).
This is untrue. It would be more accurate to say that the same party has been in power since independence from the UK. Each election in the last 30 years has slowly moved the needle -- fewer and fewer of seats held by the majority party (PAP). I guess there will be a non-PAP prime minister in the next 20 years. Sure, it doesn't look like other democracies, but please don't call it one-party. Also: See Japan. Many outsiders just don't understand democracy in Japan and try to impose their worldview on a different type of democratic system.
I'll yield that it isn't a pure one party state. There is some room for difference of opinion whether you want to characterize it as one or not.
But let's not play the bullshit and borderline xenophobic, ad-hominem attack that it's just "outsiders" who "just don't understand." Or try and distinguish that it's people 'imposing their worldview' (something every human does no matter what they are arguing).
But don't take my word for it. Read what Lee Kuan Yew had to say himself[0]:
The PAP represents the broad middle ground in society and attracts the best and brightest people into Government, LKY said last night. He therefore did not see a two- or multi-party system emerging in Singapore soon.
Ah yes, good ol LKY, the outsider who just doesn't understand Singapore, and with such a non-Singaporean 'viewpoint' that he had quite popular support (even if you want to argue it is a minority, it was widespread enough as to be valid enough to be considered one valid and widespread Singaporean point of view). Calling it not a two or multi-party system, leaving quite obviously his assertion is that it's a one-party system.
This and other points, documented by Yeo Lay Hwee (Senior Fellow, Singapore Institute of International Affairs) , who even if she flip flops between suggesting Singapore is a one-party state, lists quite a few reasons why it is a reasoned viewpoint from an understood observer [1].
I'm not sure what the conclusion is from this other than that the wealthy love having an autocratic tax haven microstate to park the money they earned from liberal democracies in.
Oman benefits significantly more from the war in Iran than the UAE, but is the most favorable country towards Iran in the GCC. See the visual here: https://archive.is/Xt3gd
Saudi Arabia and the UAE have been urging the US to bomb Iran since 2015 for their own non-oil reasons. They see political Islamism as a strategic and domestic threat. That's why they had Qatar under a blockade for a number of years. Iran is their biggest rival, exporting militancy to Yemen - the Houthis who UAE and Saudi Arabia battled for a number of years last decade. A number of attacks on Saudi and UAE oil and gas facilities from Iran Quds-backed militant groups in Iraq across 2019-2022. None of this makes the news in the West.
UAE's major issue with Saudis is their quiet support for Islamism as well. They know countries like Iran exploit for it like a wildcard which always backfires and destabilizes the region, which is bad for business.
> UAE's major issue with Saudis is their quiet support for Islamism as well.
What is the meaning of "Islamism" here? GCC is something like 98-99% Muslim by native population. Also, Saudi Arabia is the home of the two most important masjids in the Islamic world.
ISIS and Iran are pan-Islamist, which is the strain of Islamism that the UAE and Saudi Arabia fear most. Pan-Islamists don't respect national boarders, democracy, nationalism or monarchies.
MBZ is definitely more anti-islamism than the saudis. UAE really doesn't like muslim brotherhood while Saudis have supported groups aligned with them in Yemen plus Saudis are getting closer to Turkey/Qatar.
Even UAE/saudi backing different groups in Sudan war is rooted in Yemen/brotherhood issue. Both Sudanese groups sent competing troops to fight in Yemen.
> While Saudi Arabia does not have any problems with Islamists and in fact more or less openly supports them, according to Donelli, the UAE sees radical religious groups as a threat to its domestic stability, as well as stability in the wider region. This distinction is also evident in the two countries’ support for the respective sides in Sudan. The UAE supports RSF’s more secular version of Islam, whereas the SAF under al-Burhan’s leadership is widely seen as more or less a continuation of the regime of Omar al-Bashir, which was heavily influenced by the Muslim Brotherhood. https://nai.uu.se/stories-and-events/news/2025-02-07-gulf-st...
They are a wannabe Israel, a bad faith actor sowing chaos for geopolitical advantage. They've been spending money on Washington lobbyists to advocate for this war for a long time. And this isn't the only skulduggery they've been up to. They've supported the warlord Haftar in Libya and the genocidal RSF militia in Sudan.
They've hired American mercenaries to assassinate Islamist civil society figures in Yemen. They pay European right-wing influencers to spread anti Muslim content (yes you read that right). They are the buyer for conflict gold coming from the Congo. In short they are a problem.
The UAE was talking about getting a credit swap line from the US. It could be the condition.
Or it is also part of a long term plan of the US to control all energy routes. It will keep Hormuz closed and try a new pipeline via the UAE to the Gulf of Oman.
Fragmentation of the energy producers is another goal. New Alaskan LNG projects have been approved and are all the rage among senators:
"Alaska LNG will deliver vital #EnergySecurity for our military and allies in the Pacific. Thank you @SenDanSullivan for your continued engagement and advocacy."
The US would control the following:
- Baltic sea via pipeline threats.
- Corridor from the Caspian sea from Azerbaijan through Armenia to Turkey.
- Venezuela.
- UAE corridor to the Gulf of Oman.
Probably much more than that. Grabbing the Arctic route via Greenland has failed so far.
Serious question: what is OPEC’s influence in 2026? Most analyses I’ve read suggest that it’s essentially a defunct organization and has been since the 1980s, due to (1) a lack of geopolitical agreement between members, and (2) a lack of punishment/compensatory mechanisms for when individual members cheat on their commitments.
OPEC member countries control approximately 50% of the world’s crude oil exports. Additionally, OPEC nations hold nearly 80% of the world's proven oil reserves.
It's a good question. Let me answer the question this way: OPEC is the biggest single factor for the inflation shock of 2020 to 2022 yet weirdly hardly anybody talks about it.
Let's rewind to March 2020 and the start of the pandemic. For a very brief period, April oil futures went negative. Technically, this was an extreme contango market. Oil producers were running out of places to store oil and nobody was buying.
For some more background, OPEC tries to maintain oil price stability. If it gets too low, they don't make enough money. If it gets too high it creates political instability and jeopardizes security relationships with the US and Europe. So every 3 months OPEC meets and looks at oil supply and the projected demand and they adjust production to maintain a price floor and a price ceiling. Before the war this was typically $70-80. In years past it might've been $60-70. They don't always succeed because of exteranl factors, unforeseeable changes in demand or even just member countries lying about production or production cuts.
So in April-May, the then Trump administration went to Saudi Arabia to get them and OPEC to cut oil production [1][2][3]. Instead of the 3 monthly reviews which would've naturally cut production anyway to maintain the price, Trump browbeat MBS into a 2 year production cut, initially 9.7Mbpd (million barrels per day) and then reducing over time to I believe 6.3Mbps [4].
This was a disastrous deal. You can overlay a chart of the 2 year deal and global inflation and they match up pretty much exactly.
The Biden administration quietly went to MBS and asked him to end the deal. He refused. There are historical reasons for this, namely that the US (under Trump) had kinda screwed Saudi Arabia over in 2015, 2017 and 2018 but I digress.
So in the US the politics of this were that Republicans were going to pin this on Biden (even though it was a Trump deal) and the Democrats were never going to blame Saudi Arabia. Instead it was just "oil companies are greedy and bad" from a pure short-term politics POV. Nobody brought up the 2020 OPEC deal. And that's wild to me. It just goes to show that US foreign policy is uniparty and a Democratic administration was never going to publicly split with an ally like Saudi Arabia.
So does OPEC matter? Well they were instrumental in enforcing that deal. So you tell me.
That really does highlight how badly the US is a controlled petrostate, and how different that is to past events where the US goes around demanding that OPEC raise production.
OPEC doesn't adjust production. They set production targets, and then most of the members cheat. For geological reasons it's not even really possible to significantly reducing production on many oil wells without damaging them. Saudi Arabia generally has more freedom to throttle production up or down than other OPEC members.
You have another thing which is that MBS (correctly) felt comfortable ignoring Biden. If he'd slighted Trump in that way it would probably take 2 private jets to undo the damage.
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.
This is the US trying to salvage the petrodollar. They want those t-bills and oil priced in dollars to maintain reserve currency status, but the whole world is divesting anyway. UAE is hoping that by leaving OPEC they can continue to do business and get protection from US. But US isn't gonna risk a larger war just to defend UAE, US has plenty of oil to exploit in Venezuela and at home. So UAE is just kinda screwed, and petrodollar will become north-american-petrodollar. My guess is it'll happen by Q1 2027
I’ve developed a simple heuristic: If someone unironically invokes petrodollar as an explanation for anything in 2026, they’re probably not worth taking seriously.
I am personally convinced that there are many more people pretending to understand geopolitics than people who actually understand. It could be that no one truly understands due to the amount of fractal complexity and emergence.
The petrodollar and petroeuro is misunderstood. The real point: These oil/gas exporting nations don't have enough investable assets in their own nations. As a result, they need to invest overseas. For a long time, the best places to invest this excess capital in the world were/are North America, Europe, and Northeast Asia (Japan/Korea/Taiwan). If you want to say that petrodollar or petroeuro is doomed, what will replace it?
It's not that the petrodollar is doomed, it's just 'devaluing'. The US isn't a stable, safe place for cash anymore. But the world still needs massive amounts of safe cash. So there really is only one alternative: diversify.
They'll diversity into Gold, rare-earth metals (they're only getting more important), CIPS, Yuan, Euro. That diversification helps everyone else, but will hurt the US, which hurts financial markets, and thus everyone else. And once they're all divested, the diversification will add risk and losses. Can't be helped though, they still need security. So we're looking at a generation of slow global decline, probably propped up slightly by the industrialization of AI (which of course China is leading the world in, as nobody cares about "better", they care about "cheaper"). China is the real winner, because all they need is oil, and their partners will make sure they get a steady supply (because it's in their partners' interests; that's what having allies is all about).
US can't stop this; their military isn't equipped to fight wars on multiple fronts, their lumbering, expensive weapons can't be sustained in a protracted conflict, their wars aren't popular at home, and they don't have the manpower. Even when they eventually start the draft back up it'll take years to build up their warfighting capabilities, and by then the world will have diversified enough that they can take the hit. (The US will try a World War anyway to try and retain the Empire, because their leaders are psychotic morons and their people are compliant, but they'll still lose. (Historic parallel: Sparta. Great military, but tiny, so most of their power came from wealth and tenant states; eventually the rest of the mediterranean got tired of their shit (installing dictatorships, alienating allies) and their empire died. Hell, even their Navy was paid for by Persia - foreign investment used to weaken rivals via proxy war))
I don't think this is avoidable. Nobody trusts the US now. The divestment has already begun. Countries aren't suddenly going to change their minds - even if Trump doesn't overthrow the government to cement this new status quo in 2028 (which he 100% will), the next President could be another Trump. Nobody wants to be subject to their insane policies (foreign & fiscal) anymore. So the US isn't a secure place for cash. Nations aren't just going to shrug and ignore it, they're going to act to protect their interests.
To be honest this comment kind of reads like anti-US fanfiction.
>That diversification helps everyone else, but will hurt the US, which hurts financial markets, and thus everyone else.
These are huge jumps in logic, I'm not even sure where to begin. I guess the most glaring question is: If other countries are actively diversifying from US assets as you claim, why would they still be so hurt by a US financial market downturn?
>And once they're all divested, the diversification will add risk and losses.
Since when does diversification ADD risk, and how would losses be incurred?
>which of course China is leading the world in, as nobody cares about "better", they care about "cheaper"
Also a huge claim to make. You'll find plenty of people who want the best models and are pretty price-insensitive, especially among those who get the most economic value out of AI.
I too laughed when I read the response. If anything, the more bat shit crazy the response, the more it validates my original point.
> To be honest this comment kind of reads like anti-US fanfiction.
You said it better than I could. The best analogy I could dream up: This post feels like it was written as an editorial for an anti-US newspaper, like The Global Times.
About the weak diversification argument: If people really do invest much less into US assets, then other available high quality assets will also become more expensive and result in lower yields. In turn, the US assets will appear "cheap" and attract new capital. This feels like a mirror of the global soybean trade. If China says they won't buy US soybeans (primary used to feed hogs), but buy Canadian or Brazilian, then other buyers just shift where they buy from. In the end, the global demand for soybeans has not fallen, rather a brief game of musical chairs was played.
> If other countries are actively diversifying from US assets as you claim
It's not a claim, it's been reported for years. US foreign exchange reserves are at a 30-year low. Central banks have bought ~900 tonnes of gold in 2025, nearly matching the historic high during the pandemic. Central banks' holdings in gold now surpass US Treasury holdings (and we all know that gold is nearly 5x its price from last year). Poland, Turkey, India, Czech Republic have all been hoarding gold instead of dollars. France repatriated its gold. Saudi Arabia didn't renew their oil-for-tbills protectionist agreement with US in 2024. Big oil deals are now being done in Rupees and Yuan. Canada dumped its US treasuries. BRICS is already operating a new banking system independent of the US dollar. mBridge and CIPS allows China to settle payments with other countries solely in Yuan. Japan made a $75BN swap deal with India to deal in Rupees if it needs to avoid the dollar, with similar deals with Indonesia and Thailand. Japan is also working with UAE on non-dollar oil deals in the future.
> 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?
Because the global economy is one gigantic system of systems standing on top of the US financial system. When the US has a gigantic economic shock it ripples worldwide. But de-dollarization is gradual, so it will be a gradual drawdown in international economies.
> Since when does diversification ADD risk, and how would losses be incurred?
The US is where people put their money because putting it elsewhere was riskier. But now the US might be more risky. So you diversify... to the places that were risky before. So you can only move to risky places. That risk eventually leads to some loss. It's a "least-worst option" situation, but the end result isn't going to be great.
> You'll find plenty of people who want the best models and are pretty price-insensitive
That's now how capitalism works, that's how rich people work. The echo chamber of HN is full of upper-middle-class people with disposable incomes that are happy to waste money to feel emotionally better about their choices. But businesses aren't emotional, they're competitive. They want lower costs and higher profits. That means spending less. If a business can use a model that's 1/6th the price to get approximately the same results, they're going to do that, in order to gain a competitive edge. China is the place you go when you want to cut costs.
Wow, this is a great share. I am regular reader of FTAV. I highly recommend it to others here.
I like this part:
> One big flaw in their argument is that the petrodollar isn’t nearly as big a factor in the global dollar ecosystem as it used to be
And:
> A proper grasp of the events in question suggests that the ballyhoo over the petrodollar’s alleged imperilment will prove to be just the latest in a series of false alarms about the dollar’s status atop the world’s currency hierarchy.
A lot of online armchair analysts miss the fact that the Euro is just as important as the US Dollar in global trade. The Eurozone has a combined GDP of about two thirds of the US. That is huge! And they Eurozone does lots of trade with countries outside the Eurozone, so the Euro is a vital part of the global economy. The number one forex pair globally is EUR/USD. It is trivial to convert between the two (tight spreads, giant order capacity), so buyers and sellers are fine with either.
It does seem like the petrodollar is coming to an end. Even if we wanted to keep killing/abducting the leader of every tiny oil nation shortly after the decide to sell oil in another currency (like we did to Iraq, Libya, and Venezuela), bigger ones we can’t just do that to practically are going to start.
The writing is on the wall. It might take decades, but it’ll end.
Petrodollar discourse tends to annoy me because people tend to get cause and effect confused.
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.
My understanding is basically that OPEC is similar to a workers union. Countries band together and set terms that dictate the price and the supply available in the market.
UAE leaving OPEC is like breaking up a workers union. UAE is no longer required to restrict how much oil it exports, and also doesn't have to set a price floor. They're allowed to sell more oil cheaper, potentially at the expense of neighboring OPEC countries.
Which to me sounds like a good thing for the rest of the world?
Ordinarily a Cartel is illegal. If say the US breakfast cereal manufacturers decided to all agree they'll charge a minimum $20 per kilogram, no bulk discounts, the government can and likely will (assuming they don't remember to bribe Donald Trump) prosecute them and force them to stop doing that.
If you've been involved in an SDO ("Standards Development Organisation" think ISO or the IETF although the IETF would insist that they are not in fact an "Organisation" they will admit to being in effect an SDO) you've probably at least glanced at documents explaining that you absolutely must not do anything which looks like Cartel activity, you can't use the SDO to agree prices, or to cut up territory or similar things. The SDO's lawyers will have insisted they make sure every participant knows about this because they don't want to end up in prison or worse.
However the trick for OPEC is that it's a cartel of sovereign entities. It can't be against the rules because its members are the ones who decide the rules. So Chevron and Shell and so on cannot be members of OPEC but the UAE and Venezuela can.
> Which to me sounds like a good thing for the rest of the world?
It probably isn't a bad thing, but let's not overestimate the beneficial effects. The reason oil prices are high right now isn't because of cartel fuckery, it's because of Trump and his war. And oil supply chains are in such chaos because of Trump's war that even if it ended tomorrow it would take markets multiple years to return to a pre-war state.
The bottom line is that oil prices are going to be elevated for years to come, and when oil prices are high, OPEC has nothing to do other than sit back and collect the profits. And thanks to the ongoing solar revolution, oil's days as the world's predominant geopolitical poker chip are numbered; by mid-century OPEC won't be relevant anyway.
By mid century, worldwide fossil fuel usage will be higher than it is today. Solar will take over some of the electricity production including transportation but in the overall energy mix it will largely be a supplement, not a replacement. Total per capita energy use from all sources will continue to increase at a rapid rate.
> By mid century, worldwide fossil fuel usage will be higher than it is today.
Even if this turns out to be true, it would be irrelevant. The reason that oil occupies the geopolitical role it does today is because of its potential to rapidly bring the entire developed world to a halt. Oil will always be in demand because of its many useful applications (and this demand may even grow in absolute terms despite declining per-capita consumption, because the global human population is projected to continue increasing well into the latter half of the century), but as an energy source, by 2050 it will have so many highly-available complements that an oil cartel will be as relevant as a potato cartel.
The basics are the same as any other cartel. OPEC states cover enough of the supply-side of the market to be able to keep prices artificially high.
UAE leaving means UAE can price below OPEC's target and take more of the market. OPEC will have to react and lower prices or concede some of the market.
Does any of this matter if the major players can't ship oil through Hormuz? Who knows...
OPEC was never a very effective cartel in the first place. Many of the members routinely exceeded production targets. And for geological reasons it's not like most oil wells can even be throttled down.
Storage facilities allow for market supply control.
And while it's true many member exceed targets, it's like speeding on US highways: everyone does it, but anyone driving 20 mph faster than the pack is nobody's friend. Karma will happen.
None of the OPEC+ members have sufficient storage facilities to allow for meaningful market supply control. And karma isn't a real thing: most OPEC+ members are more like rivals then real allies. They'll agree to one thing and then do another, secure in the knowledge that there will be no serious consequences.
OPEC is a cartel of Arab oil-producing countries, including UAE. They limit production in order to keep the world oil price artificially high. UAE is pulling out of the cartel, presumably so it can bypass the restrictions and cash in on the high prices caused by the Iranian conflict. AFAIK this is the first time a country has pulled out of OPEC, and hopefully, it will lead to its demise.
The very short explanation is that they kind of want to be not-Saud and has trouble cooperating with Saudi Arabia for a rather long time, not just over fossil fuels but also in Yemen.
Recently the UAE faction in Yemen was forcefully reined in by the house of Saud, and OPEC kind of prioritises different things than the UAE, i.e. not pushing profits hard in the short to medium term instead focusing on stability and predictability.
Currently the saudis are trying to resolve the Hormuz issue and the attack on Iran through diplomacy, which the UAE is not exactly fond of and would rather see a violent solution. In part this is coloured by the close relation between the UAE and Israel, both of which share the view that running militant factions in failed states is preferable to orderly international relations between sovereigns. The saudis aren't as keen on this type of foreign policy and in other aspects also not as friendly with Israel as the UAE.
The UAE has been signaling that they don't really want to be a part of OPEC since at least 2020 or so. Them actually leaving was to be expected, the question should have been 'when' rather than 'if'. Iranian retaliations on the UAE and subsequent damage to the reputation of mainly Dubai and Abu Dhabi as well as capital flight probably strengthened the UAE politicians longing to get out of OPEC and start pumping and selling at full capacity to try and make as much money as possible as fast as possible.
If the UAE does not do this it'll be more exposed to credit and currencies besides the US dollar, which they probably find rather inconvenient.
Americans were leaking that Saudi Arabia was pushing for the attack. Saudi Arabia was leaking that the leader pushed against the attack. Then there was a leak about them wanting USA to finish the job and just maybe, they were for it.
It all depends on how Saudi wants to be seen in the moment and what Trump thinks makes him look better in the moment.
But like, Saudi gave Americans golden planes and extraordinary amount of bribes, so one would assume they were buying something.
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?
Probably Saudi Arabia is more important in OPEC, so that might be actually a middle finger to SA. Saudi Arabia and UAE had a recent dispute in Yemen that went pretty hot.
An alternative is the US trying to dismantle OPEC together with its new found supply in Venezuela to drive prices down
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.
1) The UAE has its "Abu Dhabi Crude Oil Pipeline" (see https://en.wikipedia.org/wiki/Habshan%E2%80%93Fujairah_oil_p...) to Fujairah export terminal on the "Gulf of Oman" bypassing the choke-point of "Strait of Hormuz" entirely. Given the current blockade of the strait and its uncertain future, Fujairah is now central to crude oil shipments for the World Market.
2) Thus far, the UAE has been prevented from maximizing its revenues due to OPEC/OPEC+ production caps which is no longer acceptable due to global needs. It can now chart its own independent course by ramping up production and earn hard currency which can be its leverage against an uncertain future. For instance, UAE just signed a deal with South Korea to give it guaranteed "priority access" (meaning first before others) and "joint stockpiling" (for world market) of 24 million barrels. Other countries in Asia who have storage capabilities are also "tripping over each other" to cut similar deals with UAE. This is once-in-a-lifetime opportunity not to be missed.
3) Discontent with OPEC/OPEC+ and its members since the current conflict has made it clear that nobody will come to its aid when the chips are down (other than the US). It is "every man for himself" now and thus UAE has decided to chart its own independent path.
This is very welcome news and i hope other OPEC/OPEC+ members will also follow suit in their own national interests.
1) The pipeline to Fujairah has capacity of 1.5m barrels per day, i.e. less than hald of UAE's current oil production.
They still need Hormuz badly.
2) They can gain by increasing their production, IF they can get that out through Hozmuz. And IF (after Hormuz is opened) other OPEC+ countries DO NOT decide to do the same and the price of oil collapses.
3) US did not meaningfully came to their help. The high-end air defense systems were reserved/moved to Isreal. They mostly defended themselves, with the stuff they bought over the years from the US. A slightly cynical take would be 'classic protection racket'.
4) The national interests of other OPEC members are best served by being united against greater forces from outside region, not by fracturing and bickering among themselves. This is classical divide and conquer.
> 1) The pipeline to Fujairah has capacity of 1.5m barrels per day, i.e. less than hald of UAE's current oil production. They still need Hormuz badly.
Not quite. ADCOP was carrying 50% of UAE production (1.5-1.8 million bpd) and is being ramped up significantly. OPEC had limited UAE's output to 2.9-3.5 million bpd thus far and since the conflict UAE has been targeting 5 million bpd. With this announcement the dependence on Hormuz is being lessened drastically.
> 2) They can gain by increasing their production, IF they can get that out through Hozmuz. And IF (after Hormuz is opened) other OPEC+ countries DO NOT decide to do the same and the price of oil collapses.
As pointed out above Hormuz is being bypassed with ADCOP's capacity being ramped up. I am willing to bet, this announcement is what will get Iran to seriously consider removing its blockade of Strait of Hormuz since its main leverage will be gone. A good example is Russia's loss of leverage over Europe when most of the EU countries cut their dependencies on Russian Oil/Gas since the start of the Ukraine war.
> 3) US did not meaningfully came to their help. The high-end air defense systems were reserved/moved to Isreal. They mostly defended themselves, with the stuff they bought over the years from the US. A slightly cynical take would be 'classic protection racket'.
> 4) The national interests of other OPEC members are best served by being united against greater forces from outside region, not by fracturing and bickering among themselves. This is classical divide and conquer.
Nope; OPEC/OPEC+ exists only to serve the interests of Saudi Arabia and Russia. The others went along since money was rolling in anyway. But now the geopolitical situation has changed and every member has to look after its own national interests.
1) any sources for 'is being ramped up significantly'? To what capacity?
2) how much are you willing to bet? :-)
3) selling them arms and then causing a conflict where they expend those arms is a protection racket, not a help
4) stating claims does not make them true. Is it in their interests for the oil prices to collapse? It is a classical prisoner's dilemma. Coordination helps all of them. Being on their own allows external players to target/influence each of the small ones separately, at their weakest. Classical divide and conquer.
You can easily find out all the details you want if you had cared to do your own research from the links/data that i had given you using your favourite search engine+AI chatbot. Instead you are just repeating yourself and expecting to be spoon fed. Moreover you are just spouting your own fanciful opinions ("protection racket"/"oil prices collapse" etc. really?) which have no bearing on reality.
However, for your edification;
The wikipedia page for ADCOP i had given above, lists a whole set of links from where you can get more info. and data. One main source is the website of ADNOC (https://www.adnoc.ae/) who owns/operates ADCOP. The UAE has been calling in loans (eg. $3.5billion from Pakistan), asking the US for money (links given above) etc. all towards having enough to ramp up production to 5 million bpd by 2027. The defence cooperation between the UAE and US is longstanding, with the recent war merely ramping it up. The OPEC/OPEC+ is just a cartel which should have been broken up long ago.
The increase in production capacity is irrelevant if you don't have a way to export the said production.
My question was specifically about the increase in the pipeline's capacity. Because your statement "As pointed out above Hormuz is being bypassed with ADCOP's capacity being ramped up." does not make sense otherwise.
Chatgpt tell me this this:
Short term: increase ADCOP from ~1.5 → ~1.8–2.0 mb/d (confirmed and achievable)
Medium term: expand storage and export infrastructure at Fujairah
Long term: build additional pipelines/corridors alongside ADCOP
Short term is too small.
Medium term does not help with the throughput, just better buffering.
And the long term is, well, long term (= many, many years).
Why could something that might happen many years in the future force the Iran to open Hormuz now?
The thing is, 5-10 years from now the importance of oil will be greatly diminished, as this oil shock will result in much greater push for decarbonisation than all climate summits combined (and the technology -- mostly solar and long distance DC lines - is essentially ready, at a reasonable cost). The gulf states see this, so I am not 100% sure all those pushes for extra pipelines will come to fruition, once the Iran war cools down.
You simply are not understanding my comments nor reading the provided informative links.
There are three things to consider viz. 1) Production Capacity i.e. new wells/sources 2) Pipeline Capacity i.e. pipeline bandwidth and no. of pipelines 3) Storage Capacity i.e both at terminal/port and distributed worldwide.
The Iran/Strait of Hormuz problem was foreseen long ago and the UAE specifically has been working on all three of the above. ADCOP construction was started March 2008, completed March 2011 and operational in June 2012. That gives you an idea of how fast things moved.
The last link about infra above lists some possible ways to increase pipeline capacity which in the case of UAE is actually Short/Medium term (easily within 5 years) viz;
... as well as enhancements or parallel lines to the UAE’s ADCOP pipeline to Fujairah,” said Kpler oil analyst Grabenwöger ... In terms of timing, the UAE probably has the most flexibility to move relatively quickly on incremental projects ...
There is also talk of extending ADCOP to the nearby Omani port of Duqm.
Conlusion:
“Five years from now, the Persian Gulf will have far better bypass options than it does today. No matter what the US and Iran agree over the future of Hormuz, the strait’s status will change. But the waterway will never be as critical to the global economy as it was when the fighting started six weeks ago,” Blas wrote.
> The thing is, 5-10 years from now the importance of oil will be greatly diminished
This line tells me you have no idea of the Petroleum industry and its importance to the modern world. Our dependence on Oil will not go away in the next 50 years nor even 100 years. As an example, look up "Naptha shortage" to understand how vital the byproducts of crude oil refining/distillation are to our modern industries. There are over 6000 petrochemicals ! (https://en.wikipedia.org/wiki/Petrochemical) Renewables only help with alternative energy sources, and given the way we have built our modern industries around petroleum they cannot meet all our needs. They can bring down our reliance on Oil but it is very longterm.
an interesting variable in all this is China. the whole crisis, and maduro being kidnapped by his american counterpart dictator, has left them only russia left as a major source of petroleum overseas.
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.
Counterintuitively, I see modern OPEC as mostly net-positive for the West because business and government most cherish stability which OPEC helps provides (emphasis on helps).
This is how peak oil happens. Without a healty cartel, oil is doomed. Solar, wind, geothermal, hydro, nuclear. These are more than ripe to disrupt energy into the 21st century.
The goal of the cartel was to stabilize prices right in the sweet spot to keep the world addicted. Too low and players start losing money, too high and people switch away from oil, too much volatility, and people switch away from oil.
Only the non-competitive ones. That's how competition works.
OPEC would be deemed an illegal anti-consumer price fixing scheme under the laws of any country with even the most basic of anti-trust laws, if not for the fact that its entirely composed of sovereign countries not subject to any law but their own.
If the price is too low and fields stop being exploited because they're unprofitable, you reduce the volume produced each day. That means there's scarcity with a low price, and you're back at trying to switch en energy source because you just can't get oil.
That moves prices upward, because people are willing to pay more, but increasing production is not like turning the faucet in your home. It takes time. This is the instability of oil production that OPEC tries to prevent, to keep the world hooked on readily available just cheap enough oil.
In a free market "scarcity with a low price" is a contradiction. If there's scarcity the prices will be high, not low. And nobody's going to be reducing production if the prices are high.
> instability of oil production that OPEC tries to prevent
First of all, if the goal is to prevent instability OPEC is doing a terrible job. Secondly, a cartel is not needed to prevent price instability, as demonstrated by the hundreds of other commodity markets around the world which are not controlled by cartels engaging in price fixing schemes.
As with any cartel, the purpose of OPEC is to maximize profits for its members, artificially fixing the price of oil at a level higher than what it would otherwise be in a free market not controlled by a cartel. Price stability is a side effect of that, not the goal.
> First of all, if the goal is to prevent instability OPEC is doing a terrible job.
I mentioned this upthread, the instability OPEC is trying to prevent is civil unrest from not being able to fund their social programs and governments. They need a price that puts them in the black and the rest of the world will pay. If it was a free market the fracking boom would still be raging and oil would be $30/bbl. Many gulf nations would fall apart if oil was at that price for a long period of time hence the price manipulation. (I'm not sure how they got the frackers to ease up, some say many of the frackers were bought out by OPEC members and their wells capped but that's just conspiracy afaik)
> The goal of the cartel was to stabilize prices right in the sweet spot to keep the world addicted.
If the price of oil remains low the gulf governments can't fund their social programs and risk instability. That may not be the only reason for OPEC but it's a major one.
When fracking really took off the writing was on the wall and I think many OPEC nations have since taken serious measures to shield themselves from price drops. This is probably why the UAE can now feasibly leave OPEC. I thought the fracking boom was the end of OPEC but they managed to hang on.
The prices would go down too much, and then infrastructure would rot as production slows down. Then, prices would skyrocket, and so on.
Oil production and distribution is basically infrastructure, like energy or internet. It can't really follow free market dynamics without eating itself.
A healthy cartel means consistent oil prices. Without it, oil may average cheaper over the long term (and almost certainly over the short term), but there will be a lot more variance.
I guess the silver lining from this mess is that maybe some
more governments realize they don’t want their energy policy to force them into a recession every time there’s a conflict in the Middle East
> Solar, wind, geothermal, hydro, nuclear. These are more than ripe to disrupt energy into the 21st century.
Yes and we've seen negative electricity price in some EU countries a few days ago: very sunny days but not too warm, perfect for solar panels. Supply surpassing consumption: negative electricity prices.
While we're, supposedly, living through an energy crisis. There may oil shipment issues and there are issues with energy due to the Russia/Ukraine war too but... Many already understood that there were solutions to not be entirely dependent on oil.
Doomsayers are going to argue that "we need electricity during the winter at 6 pm" so a "largely negative electricity on a sunny sunday means nothing" (Belgium, two days ago: hugely negative electricity prices, for example and it's not the only case) but the truth is: we're not anywhere near as dependent on oil as we were during the Yum Kippur war / 1973 oil shock.
And oil is definitely limited in how high it can go for as soon as it goes up, suddenly other energy source make more and more sense economically.
Once again: negative electricity prices two days ago. Let that sink in.
The problem is that grid scale power plants can't just turn on when the sun isn't shining. If the negative prices during the day and positive prices at night lead to energy storage, then it's a solution. Otherwise, it's just a glut at some times of day.
The world will never run out oil supply, demand will likely go first.
There are dozens of ways to increase production through world peace, better drilling technology and ideological conversion. Most of African production is well below geological potential (Libya being the easiest example, but also applies to Nigeria and the DRC etc). European shale is barely investigated, Russia is restricted by sanctions, the Middle East by war. Antartica and the Falklands are relatively unexplored but feasible.
However, the electrification of transport will erode demand in everything besides heavy shipping and jet fuel. Without that demand oil prices will crater.
> The world will never run out oil supply, demand will likely go first.
Not sure I buy that. Oil will still be in demand as a chemical feedstock. In fact, there are already people saying that oil is too precious to use as a fuel.
Some oil fields also produce Helium. That's actually an element we don't have plenty of anyway. But most don't do that, the toxic black goop they're producing is almost all just a mess of Hydrogen + Carbon chains. Similarly "Natural gas" ie Methane is just CH4.
If we have plenty of energy anyway we can just make exactly what we need, no need to drill for a mix of pot luck hydrocarbons. If we don't have enough energy anyway then we're burning hydrocarbons to get energy and we might as well use them as a feedstock too.
Oil will only be in demand as a chemical feedstock as long as it's economically competitive with the alternatives. There's a substitute for virtually every petrochemical process if oil becomes scare (or expensive) enough.
Substitution is highly impractical in the short term but in a conversations of decades/centuries it's significant. Venezuela's reserves alone could run the world's petrochemicals for 60 years (Gemini) so it's a realistic perspective. Together with other proven reserves we could be okay for centuries.
The prediction has been "by around 2050" since forever¹. Any time people find a way to increase reserves, flow rate increases to compensate, and the prediction stays approximately the same.
That's to say, I think you forgot to update your number when time passed.
1 - time started at the 1970s, that's a well known fact
"Oil" is not a homogeneous thing. There are different grades of oil and refineries are built to process specific grades of oil. UAE produces the so-called "Dubai Crude" oil grade, which is very sought after.
It could be the first domino. They do have a port on the Gulf of Oman fed by a pipeline from their major fields well inland. This may turn out to be minimal for the world, but it could be huge for the UAE and their major customers.
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.
> The UAE's exit from OPEC represents a win for U.S. President Donald Trump, who in a 2018 address to the U.N. General Assembly accused the organisation of "ripping off the rest of the world" by inflating oil prices.
I can't see how it is actually a win for Trump. OPEC has mostly been a big partner with the US. They are the ones that have mandated using the dollar as the baseline currency for buying and selling OPEC oil.
The UAE's exit almost certainly signals they are planning on selling oil in other currencies (probably the Chinese yuan). It's also a sign of the UAE wanting out of the partnership it's enjoyed with the US and it's allies.
> OPEC has mostly been a big partner with the US. They are the ones that have mandated using the dollar as the baseline currency for buying and selling OPEC oil.
Has anyone ever quantified the benefit the U.S. supposedly gets from dollar denominated oil? How does that compare to the cost to the U.S. of paying cartel pricing for oil? Given that the U.S. is a huge oil consumer, surely the cost to it of cartel pricing in oil is huge.
Paul Krugman consistently claims that there is not much benefit from it that would be visible in data. That seems to me consistent with what economists say in general.
If there is benefit it is small. It is mostly symbolic - petrodolar is a symbol of a power and people react to it.
In fairness to the UAE, of all the nations of the world, they're the ones who have lost the most economically speaking in the current unpleasantness.
It's kind of unfair.
If they can recoup some of those losses selling outside the system in Chinese currency, (or even in US currency), I have to imagine that would provide some ameliorative relief. It won't make them whole. They've got a lot of problems right now. But I mean, at least it starts them filling back in the giant hole that everyone else dug for them.
Of all the nations of the world, the one that has lost the most (at least in the short term) is clearly Iran.
On the other hand, from the longer term point of view, it looks like big part of the business model of UAE/Dubai (a safe, luxury place for rich) has been shattered and I don't see it coming back.
In the short term, they might want extra revenue, but in the long term, creating extra tensions with their neighbour can't be good.
> I can't see how it is actually a win for Trump. OPEC has mostly been a big partner with the US.
I mean, I don’t even know if I mean this sarcastically anymore, but are we sure that Trump and the US’ interests are aligned? I think something can be a win for Trump and a loss for the USA.
I believe it to be possible to vote for someone and also not be 100% aligned with every outcome they bring about.
In fact, it may even be possible for this to be more in line with the vision of people who did not vote for Trump than the people who voted for him.
If you look at presidents historically, there are some occasions where the vision they described during the campaign to get votes is not in fact the vision they bring about while governing.
Also - what is your presumption of what my vision of the USA might be?
Nobody wanted a war in Iran, recall how Trump wasnt going to start any new wars? We are in this conflict bc of Zionists - it had nothing to do with US interests at all.
There are quite a few "clean energy" ETFs (e.g. GRID, PBD, ICLN). There are nuclear/uranium themed ones too. No comment/view on whether any of those are good or not.
To anyone wondering, yes this is a consequence of the War in Iran but what this means isn't exactly clear. Or rather the consequences aren't clear.
For a super brief background, the US has what's been called an oil-for-security deal with Saudi Arabia since 1945. The US supports the Saudi royal family and Saudi Arabia keeps the oil flowing, which has largely been the case (other than 1973). Saudi Arabia remains the "big dog" in OPEC. OPEC+ is really about Russia even though it also includes Kazakhstan and Mexico. Russia became a major oil producer and exporter in the last 20-30 years.
OPEC generally likes stability in oil prices. How it works now is that every 3 months they meet and figure out what the demand for oil will be and adjust production based on that projection to maintain both a price floor and a price ceiling. Prior to this conflict that range was $70-80. Each member gets a share of that production. OPEC hasn't always been successful in policing member countries who have at times exceeded their production targets and also lied about production cuts.
Gulf countries now are utterly dependent on US arms to maintain their (typically unpoular) despotic regimes (usually monarchies). The UAE is particularly belligerent here. I view Dubai as a cleaner, shinier Mos Eisley. The UAE is directly responsible for the genocide in South Sudan. US arms are diverted to the RSF in exchange for illegally smuggled gold to Duabi that gets laundered via Switzerland [1]. Dubai is a terrible place.
Beyond Russia's rise as a major energy exporter, the US also became one in the last 15 years, particularly in 2015 when the export ban was lifted on crude oil (which had been there since the 1973 oil shock). OPEC countries are generally unhappy about this development because every barrel the US exports tends to be 1 barrel OPEN doesn't. But they're also largely powerless to do anything about it.
The Iran War is a massive strategic blunder by the US because it's shown the US has been unable to stop Iran from closing the Strait of Hormuz despite spending $1T+ a eyar on its military but, just as bad, it's shown that the US cannot or will not defend GCC countries or even its own bases in those countries from Iranian counterattacks.
Foreign countries generally pay for US bases as part of a broader security agreement and the idea of joint responsibility for security guarantees. But what if those guarantees are essentially worthless? This will completely reshape the US relationships with GCC countries. The UAE is really just the first domino to fall.
Short-term this smells like the US is either behind this break or at least approves of it. The idea is probably for the UAE to increase production in an effort to stabilize oil prices. This administration has also shown a complete disregard for historic alliances (including NATO) and they probably view OPEC as a cartel they want to break up. But I think this will long-term further destabilize the region and I wouldn't be surprised if some of these governments end up falling or at least break security ties with the US.
If anything, GCC countries will likely see China as a more reliable and stable trading and security partner as a result of all this.
> Short-term this smells like the US is either behind this break or at least approves of it. The idea is probably for the UAE to increase production in an effort to stabilize oil prices. This administration has also shown a complete disregard for historic alliances (including NATO) and they probably view OPEC as a cartel they want to break up.
I've seen reporting over the past week or so regarding the US potentially bailing out the UAE to make up for the financial harm and damage it's suffered due to the US-Iran war. How likely do you think it is that the UAE leaving OPEC is a condition for that financial assistance?
I believe that this administration more than any other post-WW2 administration either has a complete disregard for alliances or is actively seeking to shatter them even though most of them were designed by the US for US interests (eg NATO).
So yes, I can see this admin seeing OPEC as a cartel that is against US interests even though OPEC actually stabilizes global oil prices, actively. I also believe it's highly likely that the US wants to crash the global oil market when the Strait eventually reopens ahead of the midterms.
I too have seen the reports of a potential US UAE bailout and that could be leverage here. It's too early to say. It'll take time to realize the consequences of this deal and understand what led up to it and what the real goals are.
The whole war goes beyond miscalculation. It's the worst strategic blunder in US history (IMHO) and it's not even close. In 1973, the worst impacts happened 6 months after the blockade started. Well, guess what's in 6 months? The midterms. Iran is acutely aware of the US domestic politics of this. Iran also knows this is their best possible chance to end economic sanctions. Iran is more prepared to wait this out. Their goal really is to make the cost of this war so high that the US will never again think about repeating it.
The UAE has some facilities to export on the outside of the Gulf and they can ship I believe ~1.8Mbpd on the ADCOP (Abu Dhabi Cross Oil Pipeline). That's only a fraction of their 4-5Mbpd production and I'm sure they're already using it so short-term I don't think it matters so much.
But when the Strait does open, which will happen eventually, the UAE will probably go to town so to speak, exporting well above what they might've otherwise as an OPEC member.
My suspicion is that this is what the UAE's move is really about and whY I think the US is giving at least tacit approval if they're not outright behind it.
Iran lets oil traded in Yuan to navigate the Strait. OPEC sets prices in Petrodollars. What is the point of staying in OPEC then? Qatar is not part of OPEC so they were able to trade freely in Yuan.
Leaving OPEC right now means little short-term with so much production shut-in. Long-term, the UAE may cease to exist if this war goes on. Its population is 80%+ guest workers, it's totally dependent on desalination, food imports, and oil/gas exports and is incapable of defending itself on its own.
Context:
(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...
Shouldn’t UAE be upset their entire economy has absolutely rammed by the war started by Israel? At least the Saudis have pipelines - UAE is fucked
It's more complex than that.
Saudi Arabia has the East-West Pipeline [1] that takes ~7Mbpd (million barrels per day) of oil to Red Sea ports to avoid the Strait of Hormuz. They were already using it so there's not a lot of extra capacity they can get out. If we continue up the escalation ladder, the next big risk is that the Houthis close Bab al-Mandab, which is a not-quite-as-narrow but still vulnerable chokepoint to the Red Sea.
The UAE has the ADCOP (Abu Dhabi Cross Oil Pipeline) [2], which takes ~1.8Mbpd to the Gulf of Oman. This is beyond the Strait of Hormuz but not that far so technically is still vulnerable to drone attacks (in particular) from Iran if, again, we climb the escalation ladder.
The real issue is American security guarantees to GCC nations have been shown to be an illusion. Heck, the US can't protect their own bases in the region. Also, the US can't protect maritime traffic through the Strait. I mean this is in all seriousness: there is no military solution to this problem short of the use of nuclear weapons.
That means we are now in a situation where the US has to either split with Israel and offer Iran significantly better terms than they had before the war, likely including the lfiting of economic sanctions, or the US has to sit and watch the world plunge into recession and Asian countries in particular are going to burn. And who knows what a prolonged impasse will do to Europe, particularly come winter.
So far, the US seems to prefer letting the world burn rather thans plitting with Israel.
A protection racket ceases to be a protection racket if it no longer offers protection.
[1]: https://en.wikipedia.org/wiki/East%E2%80%93West_Crude_Oil_Pi...
[2]: https://en.wikipedia.org/wiki/Habshan%E2%80%93Fujairah_oil_p...
> Asian countries in particular are going to burn
They won't sit still, though. Eventually, if this were tried, we'd see Chinese-flagged tankers buying passage rights from Iran and being escorted by PLAN ships.
No way does Commander TACO take that shot. The US interdiction threat in the gulf is empty, and everyone know it. Iran gets paid at the end of every story. The whole boondoggle has been a failure for the US in every analysis.
I suspect USN commanders have been ordered to leave Chinese flagged tankers well alone, even in the absence of a PLAN escort.
The escorts wouldn't be for defense, they'd be for PR.
>That means we are now in a situation where the US has to either split with Israel and offer Iran significantly better terms than they had before the war, likely including the lfiting of economic sanctions, or the US has to sit and watch the world plunge into recession and Asian countries in particular are going to burn. And who knows what a prolonged impasse will do to Europe, particularly come winter.
I have the impression that somehow if the world will go into a recession, China will come out ahead. It looks like they either prepared for it or they have enough space to maneuver.
The UAE is over-collateralized. They can sustain such a conflict for a very long time.
davidf18 your post (and all your recent posts) is flagged dead.
UAE is the third largest producer in OPEC, and has options to avoid the straight, yet Their economy recently get shocked though by the war they wanted to avoid
strait
> Shouldn’t UAE be upset their entire economy has absolutely rammed by the war started by Israel?
It's pretty convoluted logic to blame Israel for Iran attacking the UAE.
The problems the UAE has are not based on Iran attacking the UAE but Iran closing the Strait - which is a direct and foreseeable result of Israel attacking Iran.
Someone's going to have to provide me with an explainer of how many different proxy forces are involved in Yemen. I can barely keep up with Lebanon and have forgotten Syria.
> an explainer of how many different proxy forces are involved in Yemen
RealLifeLore has been doing a decent job covering it [1].
The broad summary is you have the Saudi-backed unity government, the Iranian-backed Houthis, who claim all of Yemen but practically want North Yemen, and the UAE-backed STC, who also claim all of Yemen but practically want South Yemen. Emiratis bring the Israelis to the party. The Iranians bring the Russians. The Saudis bring various international elements (I know less about them than the Houthis and STC).
[1] https://m.youtube.com/watch?v=IgD7zmJN3_A&pp=0gcJCVACo7VqN5t...
Johnny Harris has a pretty decent video on the topic as well
https://www.youtube.com/watch?v=qsO-rULEfrk
Johnny Harris is astoundingly wrong about most things, so I'll skip it thanks
Years ago I had found his channel and liked it, and then some video (I don’t remember the title or even subject at this time) came up on a subject I happened to know quite a bit about. He got to some point in an explanation, bungled it, and then hand-waved it away, saying the details were unimportant.
Stopped caring about anything he had to say after that, and I also then realized that there was a an entire genre of “person with no actual expertise reads Wikipedia articles and explains them with good lighting and high production quality.”
Same. It was the "How The U.S. Ruined Bread" video for me after which I started watching critically and found the editing style to be over the top and makes it harder to think about the content while it's being presented. So I eventually stopped watching.
Do you have a reputable sources to back up your claims here? Johnny cites sources pretty consistently.
https://www.mcgill.ca/oss/article/critical-thinking-health-a...
> The quick cuts and dazzling montages, as well as the dramatic shots of Harris absorbed by a document he’s unearthed, highlighting it suspensefully in tight close-ups, all lend credence to the often-excellent work he does. But it also makes it easy to mask his mistakes. And for someone who takes journalism to heart, his mistakes are big, leading to oversimplification and an occasional lapse in skepticism.
[...]
> In a video that garnered 8.5 million views and which Harris thumbnailed with the words “WE HAVE PROOF,” Harris explores the recent craze over UFO sightings—sorry, UAP sightings, meaning unexplained anomalous phenomena. In passing, he mentions Mick West, who has done excellent work debunking a lot of blurry footage of what is alleged to be high-tech spy drones or aliens.
> But the bulk of the video is spent leering at report after report—a total of 144 are being investigated by the U.S. government right now!—while original music amps up the mystery. The emphasis on evidence over context is key to Harris’ style: flood the space with visuals that keep your attention and elicit questions and only occasionally pull back to explain.
Most things? That's a really strong claim, do you have anything to back it up with? Just a couple videos here and there wouldn't cut it, given how strong your claim is.
For what it's worth I watch his videos and he seems to touch on incredibly valuable topics I would never hear about otherwise, like [1].
[1] https://youtu.be/2tuS1LLOcsI?si=b3mS0meBazL0RlcS
STC was defeated after a Saudi bombing campaign, and their independent nation quashed. While there might be holdouts here and there, they are a non-entity now.
Quite impressive how they folded. UAE bluff was called spectacularly and I think that, in the future, looking back, that event might mark the beginning of the end of their geopolitical ambitions.
> that event might mark the beginning of the end of their geopolitical ambitions.
i hope so, they have been one of the biggest sources of discord in the Middle East, funding civil wars in Libya, Sudan, Yemen, funding a coup in Egypt.
Best of luck! These proxy wars have existed since the days of Assyria. 3000 years and running.
Kind of depressing thought actually.
> Kind of depressing thought actually
I gotchu: https://youtu.be/-evIyrrjTTY ("This Land is Mine", 3 min)
Finally, a history video I fully understand
Brilliant video. Thank you.
I tried to make sense of middle eastern politics once. My conclusion has been „It’s complicated.“
Reminds me of this (by now completely outdated) middle east friendship chart I once came across.
[0]: https://www.slate.com/blogs/the_world_/2014/07/17/the_middle...
I'd go to you for information before I'd go to the people who say, "It's really all pretty simple..."
Yes - but complicated by what.
Not really there are time of instability but large stretches of stable government usually under a single empire the Persians, Rome, Caliphs and then Ottomans. The current shit show is due to a western induced collapse of the ottomans and then western powers ensuring no single nation can once again enforce that stability.
>Not really there are time of instability but large stretches of stable government usually under a single empire the Persians, Rome, Caliphs and then Ottomans.
The Gulf countries now are in a far better condition than they were under the Ottomans (and than modern Turkey). "Stability" is what led the Ottoman Empire to devolve into a backwards, economically undeveloped society that was incapable of competing with the west.
Lots of things have existed throughout history, yet we have overcome them in the last few hundred years. There is peace in Europe (west of Russia) which had as ancient conflict as Yemen; there is democracy, freedom, women have equal rights in much of the world, starvation and many diseases are mostly overcome, warfare is very rare and not an omnipresent threat, ...
Thank goodness our predecessors didn't think this way. They thought that through reason, hard word, and humanism they could overcome these things, and they did. No doubt there were plenty of naysayers.
What will we do with our turn?
I wouldn't get too complacent about peace in Europe. The peace in the last 80 years or so was the result of very specific conditions that no longer apply.
While I commend the positive attitude and I tend to have a positive view on the trajectory of humanity.
This part of the planet has been almost intractable since the age of Hammurabi - it is quite fractured without any current overarching unity or framework. There isn't a dominant religion (similar to Europe) or shared values. I could say almost meaningless things like "thought that through reason, hard word, and humanism they could overcome these things" which would make little of the hard truths of the long histories of the varied peoples and fractions of the area.
It would almost seem naive to say things like because we've solved some tough problems in the last century we can solve all problems.
I think you gloss over much and certainly give yourself a mightier than thou feeling with your "Thank goodness our predecessors didn't think this way".
I too hope for peaceful resolution and stability but fall back to the historic record of success especially in a place that is constantly, recently and historically decimated by war among fiefdoms.
Europe didn’t have a common religion after the Reformation (at least not in the sense people who lived there at the time would recognise).
In fact it was wars with a strong religious element between Protestant and catholic factions that tore Europe apart for centuries afterwards
Europe didn't have a common religion before the reformation as well. There were literal crusades inside Europe including against other christians: https://en.wikipedia.org/wiki/Northern_Crusades
No dominant religion in the Middle East? Haha!
The reason is fractured is because of the inherent tribalism within the cultures of the region. Strip away the tribalism (Oman, Qatar, UAE to an extent), concentrate the people near a few cities (Egypt), or provide them a unifying overarching culture (Iran, Turkey), and you get some success. In fact, the early Islamic empires were heavily mired in infighting even though they were "unified" under the Caliphate, in spite of the Prophet's calls for the "Ummah" (One Islamic Nation). I would even argue that Islam's biggest contribution to the region was in providing a specific administrative framework with which to shed the tribal infighting and unite culturally similar but disparate peoples together. It's also why Israel succeeded as a nation with its European flavor of nation-state identity.
An Israeli intelligence officer perhaps correctly attributed it to the past culture of water scarcity and needing to protect your water sources. That is, in the desert, there are only so many sources of water, and if someone steals it away from you, you simply die. So that created a culture of inherent suspicion of outsiders and people outside the clan, even though they all share the same customs and culture.
I think there are only 3. Houthis (iran), PLC (saudi), and STC (UAE).
I guess Al-Qaeda and Isis are also there.
On whose side is Turkey? Or is it charting its own path?
Turkey’s main goal is preventing the establishment of a Kurdish state for fear of losing it’s Kurdish region.
It’s doing its own thing, mainly in Syria, Libya, and Somalia afaik.
In the Middle East everyone fights with everyone else and everyone is in covert or open alliance with everyone else. Simultaneously.
Arab Bedouin saying:
"I and my brother against my cousin, and I and my cousin against the stranger."
And for extra fun, the U.S. sometimes likes to jump into the fray.
The US is more of a bouncer on behalf of Israel than anything else, really.
-- Moshe, why are you keep reading anti-Semitic papers? -- I just like to hear how powerful and clever we are.
Defense of Israel was the primary justification offered in a recent State department memo asserting the legal basis for the war with Iran. Unusually, its publication was not announced on social media or to the press, unlike most state department official pronouncements. Anyway, rather than being opinion, this is (for the present) the official position of the United States government.
https://www.state.gov/releases/office-of-the-legal-adviser/2...
> Defense of Israel was the primary justification offered in a recent State department memo asserting the legal basis for the war with Iran.
It's funnier than that. The justification is "self-defense of its [the USA's] Israeli ally".
Sometimes?
Every ~10 year or so. As opposed to the locals who experience it daily, either war or the conflicts-between-wars.
The US has been doing air strikes in the Middle East on a regular basis since ~1990, and they extensively support the military adventures of allies like Israel and Saudi Arabia.
Saudi Arabia and Somalia agreed upon military cooperation early this is year. Egypt and Turkey are in this axis as well. Somaliland was recognized by Israel late last year. UAE and Ethiopia are on this axis. Part of the endgame might be lifting the Middle East from a transit zone to a logistics hub.
You are missing this interesting, and confidential until now, deployment of Israeli forces in UAE:
"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...
UAE is in a tough spot because while they have diversified from oil, the industries they have diversified into like tourism, air travel and banking, were relying on a halo of safety that turns out to not exist.
Also, for tourism they aren't exactly welcoming to western culture. They don't even allow trans or non binary people (X) to transit to other places at dubai or abu dhabi. Can't have your cake and eat it.
That Western culture is only a few years old and only affects a tiny percentage of people who opt into it.
While true, that doesn't really factor into this given that that market is so small that they don't lose anything by banning things that aren't compatible with their values.
So no, they most definitely can have their cake and eat it, and have done so for over two decades.
Emirates is one of the world’s largest airlines, and in many parts of the world Dubai offers the best and most frequent air connections between various cities. So while UAE itself may be a small market, it’s quite a major transit route.
They also turn a blind eye to plenty of other things that go against conservative islamic values: alcohol is served onboard, gay flight attendants are employed, etc. So it’s surprising to me that they aren’t a bit more tolerant here.
You always choose where to draw your lines.
It may be confusing to others but it's ultimately your choice.
I think it's not so much that they don't have liquid assets they can sell.
The issue is those liquid assets are US Treasuries and US public market equities (mag7 etc.).
They don't really want to sell them, and they also know that the US really doesn't want them to sell them - the last thing Trump wants heading into the midterms is an S&P500 bear market and 10y treasuries heading back to 5+%.
So they ask for a swap line and they're negotiating from a position of strength, the US doesn't have much of a choice but to give them as much as they need and damn the consequences
This kind of cooperation is not unprecedented, for example they've collaborated in the occupation of Socotra.
Sometimes foreign aid is good, other times it's bad.
"Emirati-Israeli axis"
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.
> Put together, we’re seeing an Emirati-Israeli axis emerging to balance Saudi hegemony in the Gulf and Iranian hegemony over the Persian Gulf. I’d expect to see an Emirati deal with Egypt and India next if this hypothesis is correct.
Don't Egypt and Israel hate each other though? Could UAE feasibly align with both?
Virtually all Arabs hate Israel but Arab governments are more varied. The modern Egyptian state is oriented toward close partnership with the US, and a large part of that was peace with Israel post '73.
So yes, the UAE could align with both.
> Virtually all Arabs hate Israel
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...
By the way that's just Qatari propaganda meant to put a wedge between Israel and Egypt. Qatar(Muslim Brotherhood) hates Egypt (that cracked down on MB) and hates Israel. They paid Netanyahu's advisors to push those lies about Egypt's double game and the cross border tunnels. Netanyahu the clown he is, "leaked" those lies to journalists. Qatar also paid Haaretz journalist to push those lies. The current situation with Egypt is good. They need to pretend to be somewhat cold to satisfy the hostile to Israel population, but there is cooperation and good relationship.
I did notice that Al-Jazeera was actively covering this issue. So your explanation would make sense.
What about the military exercise though? Al-Jazeera is eagerly covering it, but it is in fact happening...
I'm thinking that two things can be true at once - Egypt sees Israel as a "soft rival" and will undermine it when it can, without risking the peace itself; and Qatar is actively trying to put a wedge between them. No?
(thanks for the thoughtful discussion).
The military exercises too, just pure nonsense. Sinai peninsula has complicated security issues that they are trying to control. Egypt depends on Israel for cheap gas and really there is no indication whatsoever for any attempts to undermine. They do exercise soft power and play regional games. Egypt had and has very good leadership (with Sadat being the greatest modern leader in the middle east).
Various Arab states maintain this balancing act between a virulently anti-Israel population and a US-aligned (in most cases, US-installed) regime that’s tacitly okay with the existence of Israel.
It’s actually surprising it’s achievable for so long but in the long term doesn’t feel stable given the direction things are headed
Which Arab regimes, today, are "US installed"? Iraq is the only plausible answer.
As far as stability, I don't know. My view is that Arab democracies are unstable because they will elect Islamists. Dictatorship/monarchy has proven far more stable. Syria is trying to buck the trend; we'll see how it goes.
Maybe more accurate to say “Western-installed” although generally I don’t like grouping Europe and the US together as some coherent entity in this case it’s probably accurate.
All of the Gulf monarchies as well as Jordan are essentially western creations that were created as states mostly by the British and then heavily reinforced by the US from the 70s onwards
> Arab democracies are unstable because they will elect Islamists.
why does that imply instability?
Fundamentalists tend not to be pragmatists.
i don't think you know much about islamist parties and are just grasping for reasons to justify suppressing democracy in certain places.
ennahada (tunisia), pks (indonesia), jui (pakistan) are all examples of islamist parties that have compromised or reached across the aisle at various points just off the top of my head.
besides, isn't the point of democracy to allow people to be led by those who represent their principles? if they are in power, why should the majority expect their elected leaders to compromise those principles?
Because every Islamic theocracy to date has been profoundly destabilising for its neighbours and the world, and always ends up imprisoning and immiserating its own people. No one wants more Irans or Afghanistans. (Or Saudi Arabias, though that's not said out loud as often.)
but neither Saudi Arabia nor Afghanistan's leaders were voted in ...
and secular/socialist/monarchic dictatorships have arguably worse effects on their neighbors and citizens - e.g. Saddam, Assad, Nasser, MBZ in UAE, MBS
Yes, there are a lot of bad options in the Middle East; Islamic theocracy has no monopoly on awfulness.
I think the broader point is that a democracy is unstable when the electorate just votes for their favourite warlord / cleric, who promptly ends / rigs any further elections.
In the Middle East, there appears to be a pattern of electorates voting for / staging a revolution in favour of Islamists, which either leads to a terrible Islamist regime, or leads to an elite coup, which of course destroys the democracy in the process. Worst case scenario all of this happens at once in different places, and you get a terrible civil war.
Democracy is great, but it requires an electorate that actually wants to sustain and retain a democracy. Those appear to be few and far in between.
> In the Middle East, there appears to be a pattern of electorates voting for / staging a revolution in favour of Islamists, which either leads to a terrible Islamist regime, or leads to an elite coup, which of course destroys the democracy in the process.
that pattern is hardly unique to middle east/islamists though. look at central/south america. guatemala, chile, brazil etc all had democracies overthrown by "elite" coups.
like almost every instance in the middle east, there is actually a common denominator between these coups... resistance to the US-led order magically seems to invite instability.
That seems rather Whataboutist to me. I never claimed this only ever happens in the Middle East. We are, however, talking about the Middle East, so local examples would seem apposite. You seem to desire to make this conversation so abstract that it becomes about nothing.
> resistance to the US-led order magically seems to invite instability
Or perhaps 'resistance' is an awfully popular rallying cry for demagogues who bring instability, and the US is just the hegemon du jour. "It's the US' fault your crops are wilting! And international capital! And immigrants! And, oh, I don't know, the gays, why not. Rise up for El Generalissimo! Enlist your sons in the blood struggle, that will definitely improve things!" /s
Much sexier to be a revolutionary fighting shadowy foreign forces than to actually fix any of your own problems. No, no, tomorrow's problems will be America's fault too.
> I never claimed this only ever happens in the Middle East.
you said
> Arab democracies are unstable because they will elect Islamists.
whereas my claim is that governments (democracies or not) that run afoul of their local hegemon tend to have a short shelf life. this is not unique to US hegemony.
see: Brezhnev doctrine (USSR), or the canonical example of Athens and Melos from Peloponnesian war
> Rise up for El Generalissimo! Enlist your sons in the blood struggle, that will definitely improve things!" /s Much sexier to be a revolutionary fighting shadowy foreign forces than to actually fix any of your own problems. No, no, tomorrow's problems will be America's fault too.
I'm sorry, you seem triggered by this discussion, it doesn't seem productive to continue on my end.
Real heads know that the strong do what they can while the weak suffer what they must.
lol yes exactly.
Realism has more way explanatory power in geopolitics than idealism. Idealist explanations are typically incoherent (e.g. above thread).
> I'm sorry, you seem triggered by this discussion, it doesn't seem productive to continue on my end.
I suppose shall have to make do without 101-level instruction in Chomskyian anti-Imperialism, woven through with whataboutism and international conspiracies.
> whereas my claim is that governments (democracies or not) that run afoul of their local hegemon tend to have a short shelf life. this is not unique to US hegemony.
Wow, big if true. Someone let Iran know.
How many trillions of dollars and gallons of blood did the US expend to make Afghanistan non-Taliban, or Vietnam non-Communist? And who rules Afghanistan and Vietnam today? You mention the Brezhnev doctrine, and yet literally not one of these countries is Russian-aligned today. The Russian invasion of Afghanistan failed just as hard as the British and American ones, all at the height of those respective countries' powers. Not very powerful, these alleged hegemons.
My overall point is that the Middle East (and Latin America, etc) has many local issues (e.g. corruption, misgovernance, sectarianism, organised crime), and an unhelpful habit of blaming some ill-defined global hegemony for misfortunes that are readily explicable as the consequences of these local phenomena. The US is no innocent lamb, but it does no service to the people of any of these regions to pretend that another hundred years of anti-Imperialist rhetoric will somehow bring benefits that the previous hundred years did not.
In these countries, this brand of tired anti-Imperialism is a figleaf for authoritarians. In the West, it is masturbatory politics for a certain type of narcissistic Westerner with a saviour complex, who fundamentally believes only Westerners have agency in the world, and everyone else are just motes of dust floating in the West's shadow. It's this confluence that results in absolute travesties like Chomsky supporting the Khmer Rouge, a far greater evil than all the worst allegations against America stacked together.
If you want to help the Middle East, get involved in civil society building efforts that help bridge the gap between sectarian communities; support charitable and poverty relief efforts that are not affiliated to the Muslim Brotherhood; get involved in civil rights advocacy on behalf of the oppressed in the Middle East (women, LGBT communities, religious and ethnic minorities, the list goes on); partake in initiatives aimed at tackling corruption, organised crime, etc. Or at the very least encourage and support the people who do these things, rather than regurgitating half-remembered anti-Imperialist tropes from your polsci 101 class, as though that were a contribution of any value whatsoever.
The one thing that will absolutely not help them, at all, is more meandering, false narratives about how they have no agency in the face of shadowy global hegemons, and how should just lie down and wait impassively for some sort of new, more just world to be given to them by their Western betters.
Ok, lot' of stuff to unpack here, but I'll stick to just pointing out obvious misinfo, ehich is often repeated:
Chomsky never backed the Khmer rouge, he questioned some of the claims and western focus on the Khmer rouge, which was ignoring US culpability. He also never denied that the Khmer rouge were committing atrocities.
Was he wrong? Yes, at least in specific instances. But he was never outright supportive of the Khmer rouge. This is very old propaganda.
They're not buddies per se, but Egypt was the first ME country to normalize relations.
They've also been cooperating on blockading Gaza for a couple of decades. Israel gets most of the attention for that, mostly rightfully so, but people seem to forget that there's a border with Egypt too and that has also had very limited access.
Egypt learned on other's mistakes for once. They saw how Jordan welcomed Palestinians on their land and they repaid the kindness by launching a coup against the government in 1970. No wonder not a single anti-Israeli coalition country is willing to deal with Palestinians directly at their own home and are keeping borders watertight :) .
Don't forget that after being expelled from Jordan, Arafat relocated to Lebanon where he proceeded to take over the South ("Fatahland"), start a civil war, and pull in Israel with constant attacks across the border. Until Israel kicked them out in 1982, the Palestinians played the disruptive, parasitic role in Lebanon that Hezbollah plays today. In fact, Hezbollah rose to power precisely by filling the void left by the Palestinians in 82.
As an Arab friend summed it up, 'All Arab governments like to trumpet the Palestinian cause when it serves them, but none of them are willing to lift a finger to help the Palestinians.'
Are you sure? Jordanians tried and it burned them spectacularly. And if my memory served, Egypt also tried to some extent and eventually was eagerly and happily offloading Gaza into Israel's hands. Then, they built a huge border defensive line to keep Gazan out that would make Trump's Mexican border a joke in comparison.
At some points people need to wonder why.
Egypt is trying to have their cake and eat it too. Total crackdown on islamists at home - whether Hamas or any other incarnation of the Muslim Brotherhood - but also making sure they remain a thorn in the side of Egypt's rivals. See for example the massive smuggling tunnels discovered by the IDF in Rafah in 2024, which had been keeping Hamas covertly resupplied through Egypt. Hard to imagine that Egypt was unaware.
To be fair, part of the peace deal between Egypt and Israel gave Israel some control over the crossing, and they seized it entirely during the war.
https://en.wikipedia.org/wiki/Rafah_Border_Crossing
> The Rafah crossing was opened by Israel after the 1979 peace treaty and remained under Israeli control until 2005...
> Under a 2007 agreement between Egypt and Israel, Egypt controls the crossing but imports through the Rafah crossing require Israeli approval.
This is to a large part to give Egypt plausible deniability. They don’t want to deal with Gaza, refugees, or a humanitarian crisis, but also don’t want the political fallout of taking action like the Israelis do.
Eh, 50/50. Israel would not respond positively to Egypt throwing the gates wide open.
On the contrary, I believe Israel would be delighted. It would lessen the humanitarian burden on them, and force Egypt to deal with the Hamas problem more directly. It will never happen, though. No Arab country will "throw the gates wide open" for Palestinians. They have done so before, several times, and it went very badly.
The Israeli openly proposed for the Gaza Palestinians to move to Egypt (effectively ethnic cleansing Gaza, their obvious goal), not that long after 7.10.
Egypt said 'HELL NO', first, because they don't want to deal with Palestinians (both political and economic nightmare), and second because it would have been viewed as ceding to Israelis and helping them cleanse Gaza, which would be highly unpopular among their population.
> The Israeli openly proposed for the Gaza Palestinians to move to Egypt
Yeah, that's not "wide open". Israel would absolutely be happy with a one-way exit gate.
Most Palestinians would be happy too... In practice "wide open" and "one-way exit gate" are the same thing.
That is very reductive of the whole situation. The Egyptians are not singularly focused on helping Palestinians; it is far more nuanced than that.
Bottom line, Egyptians are not interested in supporting millions of refugees inside their border. So the border stays closed to mass immigration.
All that may be true.
Also true: If Egypt opened the border and Israel objected, Israel would take swift military action.
No, why? Israel would celebrate.
But NONE of the Arab countries want to help Gaza people really.
> No, why? Israel would celebrate.
This is directly contradicted by Israel's actions in the Gaza War. Egyptian control of the crossing was not enough, so they took it. https://www.bloomberg.com/news/articles/2024-05-07/israel-ra...
Israel would object to aid and weapons flows into Gaza. It would be fine with Gazans leaving the Strip. The problem is there are currently zero takers globally for a significant Palestinian refugee population, in part, as other comments have mentioned, due to the history of Palestinian refugee populations in the Middle East. (To my knowledge, Palestinian Americans have been fine and productive members of society.)
> To my knowledge, Palestinian Americans have been fine and productive members of society
With a few notable exceptions... A Palestinian-American murdered Bobby Kennedy for being too supportive of Israel.
https://en.wikipedia.org/wiki/Sirhan_Sirhan
if egypt opened the border, it would mean weapons and bombs flowing from egypt into gaza.
thats not something israel would be excited about
More like refugees flowing out, which Egypt doesn't want to deal with.
The Palestinians didn't help their cause with Yasser Arafat's Black September uprising in Jordan. Then they topped that up with strong support for Saddam when he invaded Kuwait. Like the ones in Kuwait were literally betraying Kuwaitis to the Iraqi troops.
Oh, and did I forget Lebanon? They literally fomented the civil war.
I mean "open the border" to allow Gazans to leave to Egypt. But Egypt (and none other Arab countries) are accepting refugees from Gaza.
At the same time, neither would Egypt. Refugee crisises are messy.
Yes, the "refugee crisis" in Jordan and Lebanon was indeed quite messy...
https://www.thoughtco.com/black-september-jordanian-plo-civi...
https://www.historiascripta.org/post-ww2/the-palestinians-of...
People don't forget it. But Egypt is a dictatorship aligned with US/Israel, so there's again not much we can do there. Ending foreign aid to Egypt is probably very aligned with ending foreign aid to Israel in terms of popularity among American voters
> Ending foreign aid to Egypt is probably very aligned with ending foreign aid to Israel in terms of popularity among American voters
I strongly suspect the average American has absolutely zero sense of how much foreign aid we give Egypt. That's not to contradict your point directly, just that it isn't a very salient part of American politics (unlike Israeli foreign aid).
> it isn't a very salient part of American politics (unlike Israeli foreign aid).
I feel like Israeli aid, while vastly more salient than it used to be, is still mostly salient as a left-of-center wedge issue, otherwise being about as salient as your average major foreign policy issue - ranking just under the least salient domestic policy issue, which ranks just under the most minor personal quality of any candidate, which ranks under the current state of the economy, which ranks under the current perceived state of the economy. Wow, that's way too many times to use "salient" in one sentence.
And for the record, I'm not arguing about how much people should care, just how much they do.
It's also become a right-of-center (right of far-right?) wedge issue in the past 12 months. But I otherwise completely agree with you; I think there's a veritable chasm between how much the media talks about the US's foreign aid (both to Israel and in general) and how much it actually matters to the average voter.
Egyptians and Israelis hate each other, not their governments. They're on friendly terms relatively speaking.
Israelis do not hate Egyptians... The Arab world has a major Jew-hatred problem, but the reverse it not true.
Remember that 20% of the Israeli population is Arab.
https://en.wikipedia.org/wiki/Death_to_Arabs
> Death to Arabs" or "Death to the Arabs" (Israeli Hebrew: מָוֶת לָעֲרָבִים, romanized: Mávet la'Aravím) is an anti-Arab slogan originating in Israel.
Your source documents a real phenomenon but doesn't support the universal claim that "Israelis hate Arabs". Please provide evidence proportional to the scope of your argument.
If Egypt were a democracy, its government would hate Israel. That's why the current dictator overthrew the last democracy and had its elected leader die in jail, and that same dictator is now supported heavily by US funding
The briefly elected Muslim Brotherhood government of Egypt was .. not as liberal as the Tahrir Square protests demanded.
I think you might be overestimating how liberal the protesters were. Source: I was in Tahrir square during the protests and spoke with many Egyptians.
Almost all of the complaints I heard while I was in Egypt were about corruption and lack of opportunity. It was more frustration with rampant nepotism/cronyism and less a desire for liberalism. From the ground, it appeared to be driven by economic forces and not political ideology.
In fact, many Egyptian men that I spoke to made the argument for the continued oppression of women (e.g. the full burqa and absence from work). In general, the populace was decidedly anti-liberal.
The election of the Muslim Brotherhood happened after I left the country, but it was no surprise to me at all. The fact that they attempted to change the constitution so quickly after their victory was unwise, and the subsequent coup by the West was just as unsurprising.
And the UAE played a large role in covertly supporting the movement that toppled it.
As I recall, it was Saudi Arabia that largely bank rolled Pakistan's "not party to the Nuclear Non-Proliferation Treaty" weapons program [Ω](?) .
[Ω] https://en.wikipedia.org/wiki/Pakistan_and_weapons_of_mass_d...
So there's that.
> ... bank rolled Pakistan's not party to ...
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?
My bad, it's late in the evening here and I typed something that works when spoken with emphasis and timing (at least in my head).
I added quotes, it should say that Pakistan's weapons program is one that is outside the Nuclear Non-Proliferation Treaty as Pakistan is not a party to it.
We all know Israel isn’t party to it either.
Nor India, nor South Sudan. North Korea was, but didn't comply and then went backsies.
Of the four never did non signatories, South Sudan is not like the others (wrt one metric at least).
We all live in a yellow cake submarine..
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.
Oh like mark Zuckerberg 30th through 40th mansions?
Thank you for this analysis! MSM doesn’t seem to be covering this and it’s hard to know what’s going on if you’re not familiar with the region.
> Egypt
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...
> Egypt is aligned with the KSA
It’s complicated [1]. My low-key guess is cutting off Pakistan was intended to send a message to Cairo.
> Already aligned with the UAE
Aligning. To my understanding there isn’t a treaty yet.
> the Pakistan aspect is overstated
Pakistan isn’t the cause. It’s the canary. These moves happening in quick succession (strategically, over the last year, and tactically, in the timing of these announcements) speaks to previous assumptions being fair to be questioned.
[1] https://www.washingtoninstitute.org/policy-analysis/egypts-t...
> My low-key guess is cutting off Pakistan was intended to send a message to Cairo
Abu Dhabi and Cairo have been misaligned for years since the Sudan Civil War began (UAE backs the RSF and KSA+Egypt back the Army) as well as the UAE backing Abiy Ahmed in Ethiopia at the expense of their traditional partner KSA.
> To my understanding there isn’t a treaty yet.
This is as close as it will get. New Delhi doesn't "sign" defense treaties unless pushed to a corner, because it reduces maneuverability.
The Pakistan-KSA alignment was already cooking after IK was overthrown. I think I mentioned it before on HN (need to find the post I wrote) but given the primacy Pakistan has had in US-Iran negotiations well before the war as well the PRC's increasingly miffed attitude at Pakistan following the CPEC attacks, the US most likely brokered a back-room realignment between PK and KSA.
A neutral-to-ambivalent India with a pro-America Pakistan is better for the US than a completely aligned India with a pro-China Pakistan.
TODO: citations
India is doctrinally non-aligned (being a founding father of the Non-Aligned Movement), and the chance of a completely US-aligned India has always been zero. Even with Russia, its closest "ally" (only by a history of cooperation, not in any formal pact-ratified sense like Russia-China), it maintains only an arms-length relationship.
India is actually the true neutral major power. I don't really count Switzerland because it was obvious it would align with the EU/NATO/US axis when things got hot, as it did in the context of Ukraine-Russia.
Yep. There's nothing wrong with that, but it means US-India relations tend to remain fairly transactional while allowing both autonomy from a strategic standpoint, such as India signing a RELOS with Russia and Pakistan under Munir returning to the American fold at the expense of the Chinese.
OPEC has long been Saudi Arabia reducing output, and everyone else selling everything they can. They haven't had much power since the 1970s, but that they exist means they are a threat that if everyone else actually stuck to the agreement for a change.
This is the common problem for cartels: everyone has inventive to cheat on the deals made. By selling a little more than your share you get more money, while because everyone else is following along the prices are higher. (see also prisoners dilemma)
Repeated PD is very different. The whole point of a cartel is that everyone inside is incentivized not to cheat, and it works as long as they agree on what's fair. The problem for cartels is people not in the cartel.
It’s well known that some OPEC members cheat nonetheless.
https://en.wikipedia.org/wiki/Tragedy_of_the_commons
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.
> As long as fossil fuels remain one of the cheapest easiest to scale ways to make power, there’s a similar incentive to cheat. If everyone else cuts emissions and you don’t, your margins are higher and you can undercut them. Global reductions require an all-cooperate scenario.
IMO economics always wins. You're never going to see an all-cooperate scenario.
You will see an all-compete scenario, so constantly reducing costs for alternatives is key but you also have to find a way to ensure that the producers can win economically too. This is the conundrum.
If solar panels get cheap enough to create high demand, then that demand has to carry through the process of manufacturing, installing and maintenance. Every time I read that solar has gotten even cheaper, I start calling for quotes to install them at my house and the prices are borderline obscene. Same for geothermal last time I needed to update my HVAC.
I want solar and geothermal to work but the economics are a challenge.
Keep in mind if you are in the US, your prices have been artificially raised by tariffs. 30% starting in 2018, then declining each year for a while to 15%. Those tariffs recently expired but when I searched I saw this article about new tariffs on certain countries solar as high as 123%.
All this to say, you calling a local company and getting quotes captures your price but that’s not quite the same as the global price.
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.
Tariffs have little to do with install costs in the US. They were horrible before Trump, and aren't much worse today.
The equipment is nearly free compared to the labor to install it. At least the last time I checked. I could do my own DIY system for about 1/4th the cost of one "professionally" installed - and I use the scare quotes for good reason. Most of the installation companies for residential solar exist to sell financing, the solar bit is just an unfortunate tertiary (behind grifting on the green energy credits/tax rebates) concern for most of them.
Panels costing an extra 65% is a rounding error for me. I'd need a whole lot more real estate to put them on for it to become a significant fraction of the total system cost.
And that might even STILL be okay if the quality of engineering and workmanship was decent and available. I'd pay the going rate tomorrow if I could find a highly competent electrician/company to do the over-engineered setup I want today. I'm not interested in saving money - I could care less if it ever pencils out. I'm interested in having a system that can survive a lengthy grid outage situation that is fully redundant and properly engineered to industrial level standards. This is effectively impossible in the US, but friends in other areas of the world have had similar setups installed for years.
In Europe you get about 1000kWh a year from 1000kW of solar panel
A plug in solar panel and microinverter at the local supermarket is about €1k/kW. 9kW of solar for €9k/£8k/$10.5k to power an average US car and an average US house.
Avearge US car does 13,000 miles a year needs about 4,500kWh, so €4500
An average US home uses 11kWh a day, or 4,000 kWh a year, that would be another €4000
US electric price is an average 17c per kWh. That's a 15% ROI.
I suspect the costs your quoting are mainly things like scaffolding and labour, and that's not going to get cheaper.
The panels themselves - ignoring inverter, install, etc, are $100 for a 400W panel [0]. To generate a whopping 16,000kWh a year -- 70% more than the average -- you'd need to spend $4k on panels. Even if panels were free, your quotes would still be obscene because tradesmen charge obscene amounts (or rather roofing work is just expensive)
[0] https://www.solartradesales.co.uk/aiko-neostar-2s-460w-n-typ...
> In Europe you get about 1000kWh a year from 1000kW of solar panel
Typo, 1000kWh from 1kW of solar panel.
I got my 4x 455W panels for 70€ each from BayWa (random vendor in Germany), plus delivery. Microinverter ~200€. Aluminium etc for installation ~400€ or so. I installed them together with a friend. Total cost ~900€ or so. At 30ct/kWh in Germany, break even is in 3 years. Would be earlier if I had a better roof to put them on, mine has some shadow.
Your US home consumption is off. EIA puts the average at 10,500 kWh per year, 875/month, 29/day.
https://www.eia.gov/energyexplained/use-of-energy/electricit...
Agreed - the good news is, in many circumstances renewable energy is cheaper for new energy capacity. As long as regulations move in the right direction, we are likely to see the global energy mix move towards renewable sources over time
Not only is the renewable energy cheaper, it also raises energy independence, which turns out to be quite relevant in today's world.
Furthermore, it also reduces the drain on the (often very fragile, for thirld world countries) foreign reserves, especially relevant when the oil prices fluctuate wildly.
If your solar panels are old and you don't have money to replace them, you get slightly less electricity. If you are out of gasoline/diesel and you have no money to buy it, you have a big, big, problem.
This is exactly why I don't think it's a huge risk to be reliant on China for solar panels. If relations between your country and China go bad, it can't be that much of an emergency when they stop exporting them to you. All the panels you already bought still work!
Unless there is some hidden cybersecurity risk of them shutting off panels remotely?
I would be more concerned for remotely triggered inverter spikes tbh. These could sabotage the whole grid if I'm not mistaken.
Yes, exactly. The panel's control system is connected to the Internet and there's an app that an attacker could take advantage of to interfere with critical infrastructure at an inopportune time.
If you are doing grid-scale installation, surely you would want your own control system (perhaps also on your own network, separated from the general internet), precisely in order to protect the grid.
There’s always the issue that it might be hard to find competent people that can implement a control network isolated from the internet if it has an internet connection by default.
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.
There are economic mechanisms for this (e.g. https://en.wikipedia.org/wiki/EU_Carbon_Border_Adjustment_Me...) but broadly, yes, it is difficult.
So little political will is needed at this point as the economics now favor renewables. Unfortunately most of the political will seems to be leaning towards protecting the more expensive fossil fuel sources of energy.
Renewables (particularly solar) already are cheaper [1].
It's political will not economics that keeps us addicted to fossil fuels. Nobody gets rich from solar panels. You build them. They produce power. Oil wells like any mine are huge wealth concentrators. That's the real problem.
If anything, a bunch of countries (particularly those who are net oil importers) are re-evaluting their energy dependence given that the compact that the US will guarantee maritime transport has essentially been broken.
[1]: https://www.iea.org/reports/projected-costs-of-generating-el...
Isn’t solar already cheaper?
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.
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]:
Ah, didn't know this, thanks. Republicans always lie, this isn't surprising.
This is interesting and under-reported. But it doesn't mean that oil would've spiked a lot less without the OPEC cuts, and that's not the same as gasoline costs which depend on refineries too.
Um, how do you figure? You realize that was a 10% cut in global oil supply, right? Of course it's going to spike crude oil prices. It's almost like the US completely stopped producing oil for 2 year (13M vs 9.7M).
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.
Isn't the solution in game theory when there are multiple turns to just repeat the move the previous person made.
So if the other side overpumped by x1 amount then you pump an extra x1 the next turn / year (maybe multiplied some reference production factor as they don't all have the same absolute limits).
Simple game theory doesn't work in the real world. In the short term most OPEC+ members other than Saudi Arabia have very limited technical ability to significantly increase or decrease production. It's not like they have a big valve that they can open or close at will. For many oil wells, restricting flow would actually damage the geologic substrate. And drilling new wells (including all of the supporting infrastructure) can take years.
Tit for tat (start by cooperating, and for each subsequent choice do what your opponent did last turn) is the optimal for repeated 2-party prisoners' dilemma.
The real world is much more complex. OPEC is a multi-party game, for starters. For another thing, there are cascades of social/political problems that get in the way of optimal strategy at the level of nations. I.e. that only works if politicians are more interested in solving problems than controlling narratives or maintaining power. Unfortunately, an ineffective leader can be sustained by controlling the narrative, while an effective leader can be destroyed by lack of control over the narrative. And one of the best ways to control a narrative (especially if you aren't a very good leader to begin with) is to create so much chaos that it distracts from your shortcomings, and blame the chaos on enemies.
Yeah also the softer tit-for-tat that offers a second chance performs better if miscommunication is added.
Not always. In a simple game yes, but sometimes the game is more complex and so it is to your advantage to play even when you know others will defect.
Then they all pump more every year
"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.
I get the sentiment but this is not a real quote
https://factcheck.afp.com/sheikh-mohammed-did-not-say-great-...
It would be quite out of character for him to say this
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.
Their whole investment castle is built on sand (pun intended) and when oil even remotely starts to fade out as a commodity, it will crumble instantly. Panic will ensue and corruption will be rampant in order to continue the lavish consumerism. Everything will be sold for pennies. The difficult thing is not to make money once, it's to keep them afterwards.
A sovereign wealth fund with over $1 trillion USD (so with over $1 million per Emirati citizen) which invests heavily in U.S. equities will be sold for pennies?
So U.S. equities will be sold for pennies?
Are you predicting a U.S. stock market crash bigger than the Great Depression, when oil runs out?
Foreign assets are only as good as your alliance with those foreign nations.
When you lose your only bargaining chip(oil), things start to look dicey.
Hhmmmm,
Could be a sell off if it isn't managed...measured buy-backs scaled over a timeline that maybe offers them an opportunity to invest in other commodities may be preferable.
Actually now that I think about it...I should probably keep a pulse on ME holdings about 2 or so decades from now
The 3 generation cycle has proven to be true in the past but families are smarter today.
Money retrained means nothing when cheap oil is gone. Cars are only a thing because we have volumes and energy for large supply chains and scale. A rich person can afford a model-T level car, but large parts of what makes a luxury car are things that they won't be able to get at any price without modern industry that is built on distributed wealth for many people. All the electronics - needs industry. Precision manufacturing - depends on precision electronics. You can't even rebuild a current design if someone thinks to print out the blueprints.
Of course who knows how to end of oil will happen. Best case is a switch to renewables (or fission...) in which case there will be more than enough expensive oil for a few rich people to drive expensive gas cars if they want to. There are lots of other options as well, only time will tell.
(and a nod here to the replies who suggest this was never actually said)
Petromonarchies invest a lot into alternative asset classes: semiconductor industry, logistics and shipping, power electric machines, biomedical development, etc. Renewables are in the list, too.
Most of those are things that depend on cheap energy [mostly oil] today. Only renewables do not, and it is questionable if we will transition fast enough to not collapse society for lack of energy (though this is looking good)
Retaining wealth is the easy part, retaining political power is hard. They don't want to be regular jetsetting billionaires, they want to rule their own domain. And in order to do that, they need to figure out how to make people want to keep living there.
Money solves a lot, but not everything. At the end of the day it's still a country in a desert. Unfortunately that entire region is a repeating history of temporary wealth and stability that gives way to instability. When that happens the underlying constraints can quickly reassert themselves. Just luck at the history of Kuwait.
The point of the line is not that they aren't going to try, it's an acknowledgement of the extreme challenge in diversifying in the short term and incentivizing the next generations who are very, very comfortable with the status quo to build other income streams in the long term.
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.
Only a little bit of time in the ME but the Land Rover is likely considered higher status.
Camels are cool still.
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".
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.
I've heard mechanics can send their kids to college servicing Land Rovers.
And where is the Jaecoo?
like off-road capable, albeit still luxurious?
Would say Land Rover is considered more expensive than Mercedes
The US has long sought to erode OPEC’s ability to dictate global oil prices. The US has made massive progress in being broadly energy independent to isolate it from challenges elsewhere. The US has been a net energy exporter since 2019. Global oil pricing was always an annoying thorn in that strategy.
This is an initial but big crack in shaking up global oil markets in a way that meaningfully shifts global power dynamics.
They export because their own refineries along the Gulf coast esp were designed for middle east heavy crude cuz the US once upon a time believed it was about to run out of American light sweet crude. So the story is not black and white.
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.
Well, the road to hell is paved with good intentions.
"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 you make a game someone's going to play it.
Allowing light trucks to turn the SUVs and replace sedans is not an "unintended consequence"--it's either stupidity or graft (not xor).
There are several laws that are "wtf -- is this the best we can do?"
How can that be if they all offer extensive lines of small and efficient cars that a good number of people drive? Besides, collusion doesn't seem likely given the amount of foreign competition. The majority of Americans have made it clear that they want bigger autos, at least with the usual gas prices. Sorry if that's corp propaganda.
Separately I've heard emissions laws blamed for large sedans losing to small SUVs and trucks due to double standards, but I doubt it would've made a difference, even though I personally prefer large sedans.
Ford no longer makes traditional passenger cars. They now only sell SUVs, trucks, and sports cars.
You can see this if you go to https://shop.ford.com/showroom/ and select sedan or hatchback in the left filters. No results.
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.
You can say the same about CAFE standards, or anything else government does? This is a silly argument.
The reason so many people buy huge trucks in the USA is specifically because heavy machinery (above a threshold) is exempt from such standards.
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.
They probably won't buy Honda Civics, but they (or their children, more realistically) might buy the electric equivalent of an F150 if the market produces one that can fulfill what they perceive their needs to be.
I just bought a (small, hybrid) truck because I need to do some truck stuff. I 100% would have bought an electric if the market produced one with comparable capability and competitive price, but we're not there yet, and I don't have Rivian money (yet! lol maybe someday).
My point being: there is still a huge demand for trucks from both a capability and culture standpoint, and very little supply of a cost-comparable product that doesn't take gas or diesel. Rivian is around double what most people want to pay, and the F150 Lightning was marketed poorly and had bad towing/hauling range compared to gas/diesel equivalents.
I'm not here to defend "truck culture" but I do believe that if you offer people a better product, they will figure it out and buy it. An electric truck with 400+ miles of towing range, an onboard 2kW+ inverter, 500 ft-lbs of torque, and fast charging for the same price as a comparable gas F150 will sell. Unfortunately the battery energy density and EV supply chain economies of scale aren't there yet in North America.
> 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.
Nah, it's not real. Your claim isn't supported by the data. Political advertising can help a bit at the margins but in the 2016 Presidential election the losing campaign spent about twice as much on advertising as the winner. Very few voters were swayed by last second radio ads.
(I would support a Constitutional amendment to restrict campaign contributions and effectively overturn the Citizens United v. FEC decision.)
Again, I don't want to get into a political slap fight here, I want to keep this on the subject of advertising.
It sounds to me like you're confusing the magnitude of advertising spending with effectiveness of advertising techniques.
Some people have found more effective ways to advertise to people, we know all this, it isn't uncharted conversation territory. We all know about micro-targetting based on personalized data, dominating certain niche mediums like AM radio to target people when they're driving and coordinated pushes with people in industry.
The point is that advertising works. It works disconcertingly well.
This is why people buy stupidly impractical automobiles that they don't need.
Which is it? If your first claim is true, why do we need to amend anything?
They seem like mutually exclusive claims, to me. Am I missing something?
If you don't want to make this about politics, use a product advertising example instead of politics which is not even comparable.
Advertised products will sell more, but only to a certain point. Like someone who wants an SUV and knows nothing else might buy the one from Chevy instead of Mitsubishi because of advertising.
> 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.
Whatever your standard is for an "efficient" vehicle, more efficient things than those 15-20mpg trucks or SUVs do exist in the US. Every automaker sells a serious car that gets at least 30mpg combined if gas-only, or like 50mpg if hybrid.
The really wild part is you think that’s good.
You’ve never driven a BYD because your government blocks them. You’ve also never driven a fuel efficient car because they hardly exist in the US
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, but it’s easier to convince them to want something that they don’t need or is actively harmful.
You can make them want things. Ad money is what powers some of the most successful companies.
Car insurance. Low flow showerheads. Fuel-inefficient vehicles. Electric dryers. Electric stoves. Appliances that don’t last. Lawn care.
Taxes. Social Security.
The list is gigantic. Your claim could not be more false.
People want car insurance because it's a law, low-flow showerheads if water is expensive, and electric appliances if gas is expensive or outlawed. And some want fuel-inefficient vehicles because they like them and gasoline isn't very expensive, while plenty of other people opt for MPG.
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.
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
This is a myth. Larger vehicles are not safer for their occupants; they merely feel that way.
> This is a myth. Larger vehicles are not safer for their occupants; they merely feel that way.
I'm pretty sure it's not, because physics. A tank is safer than a bike for the poilot, when there is a collision. This data is a little muddled, but follows common sense.
Large SUVs and Pickups: These vehicles have the lowest occupant fatality rates, averaging 14 deaths per million registered vehicles for SUVs compared to 48 per million for sedans. Large luxury SUVs often register statistically zero deaths in specific three-year studies.
Nope, not a myth. While the data is noisy and there are some confounding factors, the IIHS driver death rates show a clear correlation between larger size and fewer deaths.
https://www.iihs.org/ratings/driver-death-rates-by-make-and-...
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.
Compare the Maverick to a Japanese kei trucks, they so impressed the current president that he signed an executive order allowing them, if they're manufactured in the US.
Good example of what they have in Japan right now.
The Maverick is quite sizable compared to the original Ford Ranger too, which was still bigger than the regular Japanese trucks that were all over the US after oil skyrocketed the first time:
https://www.youtube.com/watch?v=ukmzZ5DXBqQ
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.
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.
The exception being blamed on "stupidity" makes it sound like an oversight.
It was not an oversight. It was corruption.
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.
What if consumers want to buy Chinese electric cars? Are we going to remove that bit of protectionism?
Great catch!
There's a trend toward advantaging entrenched interests to the detriment of the overall economy and interests of the population.
Yeah, but "increasing taxes" always rouses the rabble.
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).
https://medicalxpress.com/news/2025-02-cigarette-pricing-pol...
A 2025 study showing that it did.
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.
2017 when Venezuela accepted RMB for oil and then USDT crypto. USDT is being used to skirt the US's control of the oil and bypassing the dollar.
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
This is horrible from POV of mitigating the climate catastrophe and the global death toll. We (as in humanity) are really late in ramping down fossils production and use.
Eh if the U.S. gets into a forever war with Iran the same way we did with Iraq and Afghanistan and Vietnam (or like how Russia got into one with Afghanistan and Ukraine), the climate crisis is solved. Five years of the Straight of Hormuz being closed and everybody will be using EVs.
Legislation isn't going to work. Economics isn't going to work. War - which cuts off the flow of petroleum because nobody is willing to risk their life for oil - will work very quickly. Nothing quite like a shortage to spur innovation.
80% of the world's oil is not going through the straight at all. 5 years is still optimistic. Esp if we are starting wars to pump up the futures market
Doesn't take a huge decrease in production to result in a huge increase in price, due to inelasticity in demand.
Renewables and EVs are a capital-intensive industry, and the thing about capital-intensive industries is that they're prone to bubbles. If you get a year or so of EVs being cheaper than gas cars, you will see a huge growth in sales as lots of consumers make the rational choice all at once. The spike in sales will spur a bubble in capital investment as investors all rush to capitalize on it. The capital investment spurs R&D, which results in technological improvements which make the cost advantage permanent.
At the end of the 5 years (or perhaps even before) the price of oil will crash back down, probably lower than it is now, as increased EV adoption destroys demand more than supply was choked off. But at that point we'll all own EVs, they will cost less than gas cars, there will be chargers everywhere, there will be solar panels everywhere, and we'll have better batteries and V2H charging.
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.
The US/China trade war is intensely relevant to the large scale deployment of renewables in the US.
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.
In extreme scenarios it is certainly possible for the US to ban exports of certain fossil fuels, effectively making an internal US market that is isolated from the rest of the world and basically energy independent.
Yes, we would need to build more refining capacity to use it all effectively, but in a cataclysmic event (i.e. a world war or something) the US would be much much better off than most other countries.
That makes no sense at all. We just had a post about several countries with energy independence who had done it with zero extractable resources. For them, the magic key was having tons of hydro and a small population. They just stopped importing. Countries like the US will need a lot more power and a lot more diversity of generation but it can be done if there was enough will to do it.
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
Northern Europe, at least Scandinavia, is already at 90%+ non carbon electricity generation. (88-100%)
Central and Eastern Europe have it tougher.
Central/Eastern Europe is rather into nuclear (Austria on renewables) and not too heavy on fossil, exceptions being Poland/Czechs/Germany with too much coal.
The Balkans are quite fossil-heavy, but solar should be quite feasible there.
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.
If foreign supply is cut, the price goes up for everybody everywhere. Even net exporters. That's the whole point of this thread. Every drop of oil, gas or coal extracted (and not under sanction) will be sold to the highest bidder anywhere in the world.
Self sufficiency generally comes at a cost. The whole promise of globalization is that it makes things cheaper.
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.
They may think it's leverage until they are glassed by the empire for not toeing the line
I don't think there is any evidence that they actually need the dollar swap line - the dirham-dollar peg isn't at any risk and they have plenty of money for fiscal flexibility going into the foreseeable future. If you take financial reasons off of the table then it is clear it is just a political play for a bigger seat at the table with the US.
The Saudis did it to Biden in 2023, the UAE sees the opportunity to do it to Trump now.
They need the dollars because they're an import-oriented economy, almost all of which are conducted in dollars (nobody wants their dirhams because oil is priced in dollars anyways). Dollars are also useful for their sovereign funds to invest into the US, either in the stock market, or in private equity.
What happened this week - they announced they might start selling in yuan, they left the OPEC, and they started a new wealth fund to invest exclusively in China. That gives them an alternative for the dollar-peg since China is their biggest import partner anyways, while also giving their surplus yuan an alternative channel of investment into China.
Still they need the dollar-swap for the essentials - food from India and Pakistan, neither of which will accept their dirhams unless they get exclusive deals (which are not allowed in OPEC). It helps for them that India and Pakistan need lots of oil, and that a dollar peg benefits the UAE more than it does either nation. If the EU plays a greater role in trade, particularly in defence and maritime manufacturing, they will stockpile euros too, to the detriment of the dollar.
Still, they also bought some prime DC acreage to expand their US diplomatic corps, and will likely keep the Washington connection, so long as AI is perceived as useful. Right now, that's the only major export benefit the US provides the Gulf countries. This is them just hedging their bets.
At last report (Feb 2026) the UAE had ~$250b in foreign currency reserves. They have plenty of non-AED currency.
The Yuan is the current bogeyman the Gulf States use when they want attention from the US (not that they’re not diversifying, just that it isn’t a structural shift in a meaningful way). The UAE is making this play right now to make sure they are part of the conversation in deciding how things with Iran end and making sure their influence is sustained after the current administration.
The wealth fund is a way to deploy whatever yuan they receive while gaining political favor with China as well.
exactly. this sounds like a third path where the UAE charts its own course, and that course increasingly looks paved in Yuan.
OPEC cartel membership didnt gain it access to Hormuz, and the US petrodollar promise to protect UAE states from aggression in exchange for trade in USD could not be upheld.
> the US petrodollar promise to protect UAE states from aggression in exchange for trade in USD could not be upheld
Well the war is still ongoing, and Iran's regime is already feeling the pain of the blockade [1]. Pricing oil in Yuan because, I guess, the US is somehow not protecting the UAE doesn't make sense because China won't be there to protect them either. The US can just say, well fine you can sell your oil in Yuan. But we'll just blockade the Straight and seize oil priced in Yuan or something. Who exactly does the UAE need protection from? Iran? China's ally?
I swear I read this same story over and over again. There's always just an accusation "thing happened, here's how the US is now in a state of being screwed" and there's just never any follow-up or perhaps imagination that the US could just do something too. Hypersonic missiles? US Navy is done for, no possible counter. Iran has drones? Boom. US is done for no way they can spend Patriot missile money on $30,000 Iranian drones. Nope, nothing anyone can do at all. Iran "closes the Straight", well the US can't do anything. Now they are "embarrassed" and "slammed".
> OPEC cartel membership didnt gain it access to Hormuz
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.
people tend to forget the exorbitant privillege of the US. originally this idea applied to USD being the global reserve currency. but it goes so much further. critics of american foreign policy simply lack a sense of proportion. there is so, so much leverage the US has. which they use to do things that wouldn't make sense for any other country. while still coming out on top. i'm glad to see specifics being provided in support of this idea
* Strait.
"Strait" refers to something which is narrow, especially at sea. It can be pluralised as "Straits" in many cases. "Straitjacket" also comes from this root.
"Straight" refers to something which is not curved. The "gh" used to be pronounced and still is in some parts of Scotland.
> 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.
The missing ingredient has never been how many missiles Iran has stockpiled, it was external military action from someone like the US that gave them the window to assert that control.
The US didn't do the world any favors by getting it out of the way sooner or something, that's just absurd apoligism for a poorly planned war of choice that has obviously been a net negative for basically the entire world.
It would be like if the US nuked China and then shrugged after they predictably retaliated saying it just proved the threat from their stockpile that had always existed.
> I keep hearing this line defending US intervention but it doesn't really make sense. Iran was not threatening shipping traffic in the strait regardless of how many missiles they stocked up until they were forced to do so as an asymmetric warfare response to an attack by a superior military.
Why would they threaten to do so prior to being ready? Have you ever played a strategy game where you build up your forces for an advantageous offensive or defensive position? Countries do this too. If we were playing a game where my actions would provide some advantage or victory over you in some area or a broad area, why would I announce what my intentions were to you so you could react or anticipate my actions?
Separately, you can just ask: why are they even stockpiling missiles in the first place? Why isn't Singapore stockpiling missiles, or perhaps Portugal, or Panama, or Morocco? Of course, this then introduces the circular reasoning "because of a potential US attack", but of course if Iran wasn't funding Hamas, Hezbollah, Houthis, and more, building up these missile stockpiles, continuing to pursue a nuclear bomb, helping Russia with its invasion of Ukraine, we wouldn't be here. At some point you just have to look at their actions and their actions suggest implementing a plan.
> The missing ingredient has never been how many missiles Iran has stockpiled, it was external military action from someone like the US that gave them the window to assert that control.
They don't have control over the Straight of Hormuz. It's a bit of semantics, but control would mean they can allow or disallow ships to pass based on their own decision making. They can disallow ships, but the US can also disallow ships. If Iran controls the Straight of Hormuz because they can fire missiles at ships, the US also controls the Straight of Hormuz because of that very same capability.
> Of course, this then introduces the circular reasoning "because of a potential US attack", but of course if Iran wasn't funding Hamas, Hezbollah, Houthis
I think the first step of thinking about war objectively is to consider how each side sees it. The US POV is no less circular, from Iran’s perspective - they could list any number of provocations from the US to justify arming themselves, none more obvious than the war itself.
The debate around who started the hostility is ultimately pointless, the question is what to do about. Ideally the answer isn’t “arm for obliteration because the other side started it”
Sure.
So let's say Iran stops building up massive amounts of missiles, funding these terrorist groups, stops pursuing a nuclear weapon, stops mass killing of its own civilians, and stops helping Russia prosecute its war against Ukraine (we can even leave this optional just to not introduce additional complexities).
What will the United States now have to do on its side as it pertains to Iran?
are you implying that the US share in the hostilities is only direct military intervention? because that's not correct. through their alliances, they are additionally responsible for more
It is not a game. And this war happened because Israel and USA assumed Iran is weak.
This had squat zero with acute danger of military buildup. This happened because Hegseth thought Iran will fold and found it super unfair they did not.
> Separately, you can just ask: why are they even stockpiling missiles in the first place?
To protect themselves when America starta Another war. It cant go without war for long. As brutal as iran is, there was no imminent threat of expansion
It is israel who just displaced millions of people.
Is the idea here that only USA gets to have missiles?
Iran is weak compared to the United States. The war wasn't started because Iran is weak, it was started because Iran is engaging in various activities that have effects in the world that the United States finds unacceptable.
> To protect themselves when America starta Another war.
Yet, only Iran has to protect themselves. Why is that? Well it's because they're doing bad things, and they know that we may do something about it. Why isn't Peru stockpiling missiles, or Thailand, or Iceland? It's because Iran's government was seized by an authoritarian regime that hates America and decided we would be the enemy forever and has continued to attack, and take other violent or non-violent actions that destabilize the region and global trade. If they just stopped doing this stuff, there wouldn't be a reason to "attack".
> It is israel who just displaced millions of people.
I don't think so. But Iran is responsible for Syria and those millions of people too. Like Maduro is responsible for the 8 million + refugees from Venezuela.
Your point of view of the world does not match reality. Stop making excuses and defending brutal authoritarian dictatorships.
> Is the idea here that only USA gets to have missiles?
Well you believe in nuclear non-proliferation, right?
> Stop making excuses and defending brutal authoritarian dictatorships.
this style of argument really falls flat in 2026 tho. at least for a global audience. it seems you don't appreciate how much america's image as a champion in good faith of freedom, democracy and prosperity has been shattered. not least because the old neoliberal guard has been busy undermining it (see carney's speech at WEF, where he started by pointing out that not only was the rules based order a lie, but that it is no longer acceptable to pretend otherwise). but now also because US aggression is perceived as directly responsible for the global energy crisis, which is affecting everyone else. america simply doesn't have a high horse to get on anymore
Those states could export oil entirely reliable. They had tourism and finance industries dependent on them being safe.
Iran did not mined strait until USA and Israel bombed it twice during negotiations, threatened civilisation destruction, murdered political leaders and attacked BOTH civilian and military infrastructure.
You dont get to start a war or bomb and then blame the other side for not passivele accepting the situation.
USA caused harm here.
> threatened civilisation destruction
Iran threatens to erase Israel and the United States off the map pretty much daily. So I just don't care that Trump did the same back to them. If they don't like threats like that, perhaps they should stop issuing them yea?
> murdered political leaders and attacked BOTH civilian and military infrastructure
What civilian infrastructure was deliberately attacked? We do know that Iran deliberately attacked civilian and military infrastructure. Did you mix the two up?
> You dont get to start a war or bomb and then blame the other side for not passivele accepting the situation.
Who started the war isn't an easy question to answer. I can easily and obviously argue that Iran started the war when they attacked Israel through their proxy forces. Ultimately though who "started" the war doesn't matter that much. Both sides have had grievances for quite a long time and things are just finally coming to more direct conflict.
> What civilian infrastructure was deliberately attacked?
Its clear you have only been getting your information from a certain set of sources. a lot of civilian infrastructure has been destroyed in Iran.
One of Israel's goals is to cripple the economy of Iran.
"Israeli leaders, including Defense Minister Israel Katz, have ordered the military to carry out strikes on targets that cause economic blows to the Iranian regime."
"This included a strike on major Iranian gas infrastructure in the country’s south nearly two weeks ago, and strikes on two of Iran’s largest steel factories on Friday. "
https://www.timesofisrael.com/israel-shifts-to-hitting-irans...
"Missiles also struck one of Iran’s biggest state-run pharmaceutical companies, Tofigh Darou, destroying its production and research and development units, state media said on Tuesday, blaming the strike on Israel. It’s a major producer of anti-cancer drugs and anesthetic in Iran"
https://archive.is/KAtCR
"A century-old medical research centre (Pasteur Institute) set up to fight infectious diseases like plague and smallpox has been heavily damaged in strikes on Tehran"
https://www.telegraph.co.uk/global-health/terror-and-securit...
In addition, one of my friends who lives in Iran reported that a dialysis center, a refrigerator factory, a public park (that had "police" in the name), a popular chicken restaurant, and an entire apartment building full of people were each separately targeted and destroyed (apartment building was double tapped, killing rescue workers)
the above is just a small selection, universities, factories, bridges, oil infra has all been targeted as well.
would you consider US Steel factories, universities that do research for the military, factories or companies that make components that go into US weapons, apartment buildings where one military leader lives as military or civilian infrastructure?
and let's not forget the boming of a literal school for girls
true, but there's some evidence that was unintentional. whereas Trump and Israel are openly saying they are targeting bridges, oil infra, economic targets etc.
>Well, Iran closed the Straight and the world is facing biggest oil crises since 90ties. US was in fact incapable to prevent it. Even if the Straight opened today, harm already happened and will continue to happen for months. And I dont think it will open today.
Adjusted for inflation the price of oil isn't even the highest it's been this decade, let alone historically.
The price tripled from 2003-2008 as well.
>The war did not had to start at all
We probably won't know for twenty years if that's true or not. It's not as Iran's been some peaceful country for the last twenty years, they actively have sponsored terrorist organizations with the purpose of destabilizing the region. The country also sits on a wealth of natural resources but was solely researching nuclear power for peaceful purposes.
Really the big lesson for the next superpower is to simply act earlier. If you don't care about winning and just being a thorn in everyone's side, ballistic missiles are a great investment, and it should have been taken more seriously when Iran started stockpiling thousands of them.
> Adjusted for inflation the price of oil isn't even the highest it's been this decade, let alone historically.
I dont think UAE cares about American oil prices that much. Nor does Europe nor does Asia. That just meand America is less motivated to solve clusterfuck it created.
And yes, it is huge issue already. With flies cancelled for summer, with strategic reserves already being used, with homeschool and home office in some countries, shorted workweek in others, factories producing less.
> We probably won't know for twenty years if that's true or not.
We do know that. There was no urgent reason to start badly prepared war. And no involved country is peaceful.
> The country also sits on a wealth of natural resources but was solely researching nuclear power for peaceful purposes.
It was entirely legal for them, because literally USA teared down agreement to do the opposite.
And what everybody knows now is that the only way to be safe from aggression is to have nuclear.
Psst... It's a "strait" not a "straight". Strait refers to a narrow thing like a straitjacket. Straight means something which is not curved.
"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.
“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
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.
>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.
Uh, from the UAE's perspective it is much worse. They sold many $Bs worth of oil and had become a global tourist hub, now they can't do those things. They are being patient for the time being but there's a limit. We don't know what that limit is but if 6 months go by and the Strait's not open can we really expect them to not pay Iran a toll and price their oil in yuan?
What are you talking about? This level of escalation hasn’t happened for at least a quarter century. I know, because I’ve lived in the gulf for large parts of that period
Has the GCC been in an existential state of panic to the point where they’re seriously questioning their relationship with the US any time in the past 30 years?
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).
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?
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
My guess is that is this because UAE has ports on the other side of Hormuz and doesn't want to be restricted in their usage by OPEC? Does this mean UAE thinks Hormuz will be a problem for a long time? And what does it mean for oil prices long term?
> My guess is that is this because UAE has ports on the other side of Hormuz and doesn't want to be restricted in their usage by OPEC?
Does OPEC limit that? It would be very surprising to me if they did, as the point of opec is only to limit production when oil prices are low. They aren't low right now.
Besides, nobody actually follows the OPEC limitations.
It means the UAE is pissed Iran attacked it then tried to block all passage through UAE controlled waters.
The UAE has the ADCOP (Abu Dhabi Cross Oil Pipeline) to move oil to beyond the Strait. It has a capacity of ~1.8Mbpd (million barrels per day) so is only a fraction of the UAE's total oil exports and a tiny fraction of the oil exports impacted by the Strait being closed. It's also being used already. I don't know how these particular oil exports have been impacted. They are beyond the Strait but not by that much. Iran is still entirely capable of harassing shipping there.
I believe the US has given tacit approval or is behind this move entirely for what comes when the Strait inevitably reopens and that is to get the UAE to export well beyond what they might otherwise as an OPEC member.
The UAE like most GCC countries is entirely dependent on US arms to maintain their regime so I simply cannot imagine them doing this without the US putting them up to it or looking the other way.
> ~1.8Mbpd (million barrels per day)
Mbpd = thousand barrels per day, MMbpd = million barrels per day
> so is only a fraction of the UAE's total oil exports
Isn’t it 30-50%ish depending on how you count it? Calling it “a fraction” makes it sound much smaller in conventional English.
They might be leaving either for a) price independence or b) currency flexibility.
OPEC doesn’t enforce currency or monetary policy rules.
Do they? I just looked at a map and I see very little oil infrastructure on that side of Hormuz plus isn't Oman Iran aligned?
No expert but I always got the impression Oman was a neutral party. They help run the Hormuz with Iran but largely neutral in world politics.
It also looks fairly easy to mine/blockade outside of their territorial waters. You don’t need that many drones to make the whole area unusable for marine transport. The strait is the clearest choke point but I don’t know how much bypassing it would help UAE
You don't even need to hit that many ships either.
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_...
Passing the strait is effectively playing Russian Roulette, where Iranian missiles are the bullets.
Fujairah, on the other side of Hormuz is the fourth largest bunkering hub in the world. That’s not “little oil infrastructure”
They do, it's only like 1-2 million barrels a day in capacity right now.
Oman is the Switzerland of the Middle East.
As democratic popular opinion turns against classical liberal economic principles, many theocratic or monarchist hell holes are increasingly becoming the unexpected underdog turned winners in economic freedom. It's been fascinating to watch.
My understanding is that unique historical, cultural, and even geographical factors have led to this outcome for Oman. I would encourage you to read up on the history of the country to understand the nuance here and not paint with such a broad brush.
Everyone has a unique "..." and a nuance here and a nuance there.
UAE has a unique yada yada and also ended up with a surprisingly remarkably free economic index despite being a theocratic monarchy.
As did the monarchy Lichtenstein, British controlled Hong Kong, and the one-party state of Singapore (technically democratic, in practice it functions like a recallable monarchy).
Also of note the three richest countries by GDP PPP per capita are Monaco (hybrid monarchy with monarchist veto powers), Lichtenstein (hybrid monarchy with monarchist veto powers), Singapore (single party state).
I'll yield that it isn't a pure one party state. There is some room for difference of opinion whether you want to characterize it as one or not.
But let's not play the bullshit and borderline xenophobic, ad-hominem attack that it's just "outsiders" who "just don't understand." Or try and distinguish that it's people 'imposing their worldview' (something every human does no matter what they are arguing).
But don't take my word for it. Read what Lee Kuan Yew had to say himself[0]:
Ah yes, good ol LKY, the outsider who just doesn't understand Singapore, and with such a non-Singaporean 'viewpoint' that he had quite popular support (even if you want to argue it is a minority, it was widespread enough as to be valid enough to be considered one valid and widespread Singaporean point of view). Calling it not a two or multi-party system, leaving quite obviously his assertion is that it's a one-party system.This and other points, documented by Yeo Lay Hwee (Senior Fellow, Singapore Institute of International Affairs) , who even if she flip flops between suggesting Singapore is a one-party state, lists quite a few reasons why it is a reasoned viewpoint from an understood observer [1].
[0] https://eresources.nlb.gov.sg/newspapers/digitised/article/s...
[1] https://library.fes.de/pdf-files/iez/01361007.pdf
I'm not sure what the conclusion is from this other than that the wealthy love having an autocratic tax haven microstate to park the money they earned from liberal democracies in.
This is true, but these countries aren't doing it for the benefit of foreigners, they're doing it for the benefit of themselves.
The UAE is not theocratic. Yes, Islam is the official religion but there is freedom of religion.
You should visit Fujairah ! Huge facilities there.
https://en.wikipedia.org/wiki/Habshan%E2%80%93Fujairah_oil_p...
That would also explain why UAE is oddly in favor of a war in their region.
Oman benefits significantly more from the war in Iran than the UAE, but is the most favorable country towards Iran in the GCC. See the visual here: https://archive.is/Xt3gd
Saudi Arabia and the UAE have been urging the US to bomb Iran since 2015 for their own non-oil reasons. They see political Islamism as a strategic and domestic threat. That's why they had Qatar under a blockade for a number of years. Iran is their biggest rival, exporting militancy to Yemen - the Houthis who UAE and Saudi Arabia battled for a number of years last decade. A number of attacks on Saudi and UAE oil and gas facilities from Iran Quds-backed militant groups in Iraq across 2019-2022. None of this makes the news in the West.
UAE's major issue with Saudis is their quiet support for Islamism as well. They know countries like Iran exploit for it like a wildcard which always backfires and destabilizes the region, which is bad for business.
ISIS and Iran are pan-Islamist, which is the strain of Islamism that the UAE and Saudi Arabia fear most. Pan-Islamists don't respect national boarders, democracy, nationalism or monarchies.
No. The UAE’s major issue is that KSA has finally awoken from its deep nonsensical slumber (I can elaborate further if there is interest).
This is a battle of economies and regional influence.
MBZ is definitely more anti-islamism than the saudis. UAE really doesn't like muslim brotherhood while Saudis have supported groups aligned with them in Yemen plus Saudis are getting closer to Turkey/Qatar.
Even UAE/saudi backing different groups in Sudan war is rooted in Yemen/brotherhood issue. Both Sudanese groups sent competing troops to fight in Yemen.
> While Saudi Arabia does not have any problems with Islamists and in fact more or less openly supports them, according to Donelli, the UAE sees radical religious groups as a threat to its domestic stability, as well as stability in the wider region. This distinction is also evident in the two countries’ support for the respective sides in Sudan. The UAE supports RSF’s more secular version of Islam, whereas the SAF under al-Burhan’s leadership is widely seen as more or less a continuation of the regime of Omar al-Bashir, which was heavily influenced by the Muslim Brotherhood. https://nai.uu.se/stories-and-events/news/2025-02-07-gulf-st...
They are a wannabe Israel, a bad faith actor sowing chaos for geopolitical advantage. They've been spending money on Washington lobbyists to advocate for this war for a long time. And this isn't the only skulduggery they've been up to. They've supported the warlord Haftar in Libya and the genocidal RSF militia in Sudan.
They've hired American mercenaries to assassinate Islamist civil society figures in Yemen. They pay European right-wing influencers to spread anti Muslim content (yes you read that right). They are the buyer for conflict gold coming from the Congo. In short they are a problem.
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.
The UAE was talking about getting a credit swap line from the US. It could be the condition.
Or it is also part of a long term plan of the US to control all energy routes. It will keep Hormuz closed and try a new pipeline via the UAE to the Gulf of Oman.
Fragmentation of the energy producers is another goal. New Alaskan LNG projects have been approved and are all the rage among senators:
https://xcancel.com/alaskalng
A happy coincidence:
"Alaska LNG will deliver vital #EnergySecurity for our military and allies in the Pacific. Thank you @SenDanSullivan for your continued engagement and advocacy."
The US would control the following:
- Baltic sea via pipeline threats.
- Corridor from the Caspian sea from Azerbaijan through Armenia to Turkey.
- Venezuela.
- UAE corridor to the Gulf of Oman.
Probably much more than that. Grabbing the Arctic route via Greenland has failed so far.
Serious question: what is OPEC’s influence in 2026? Most analyses I’ve read suggest that it’s essentially a defunct organization and has been since the 1980s, due to (1) a lack of geopolitical agreement between members, and (2) a lack of punishment/compensatory mechanisms for when individual members cheat on their commitments.
OPEC member countries control approximately 50% of the world’s crude oil exports. Additionally, OPEC nations hold nearly 80% of the world's proven oil reserves.
Does being a member of OPEC affect that at all?
It's a good question. Let me answer the question this way: OPEC is the biggest single factor for the inflation shock of 2020 to 2022 yet weirdly hardly anybody talks about it.
Let's rewind to March 2020 and the start of the pandemic. For a very brief period, April oil futures went negative. Technically, this was an extreme contango market. Oil producers were running out of places to store oil and nobody was buying.
For some more background, OPEC tries to maintain oil price stability. If it gets too low, they don't make enough money. If it gets too high it creates political instability and jeopardizes security relationships with the US and Europe. So every 3 months OPEC meets and looks at oil supply and the projected demand and they adjust production to maintain a price floor and a price ceiling. Before the war this was typically $70-80. In years past it might've been $60-70. They don't always succeed because of exteranl factors, unforeseeable changes in demand or even just member countries lying about production or production cuts.
So in April-May, the then Trump administration went to Saudi Arabia to get them and OPEC to cut oil production [1][2][3]. Instead of the 3 monthly reviews which would've naturally cut production anyway to maintain the price, Trump browbeat MBS into a 2 year production cut, initially 9.7Mbpd (million barrels per day) and then reducing over time to I believe 6.3Mbps [4].
This was a disastrous deal. You can overlay a chart of the 2 year deal and global inflation and they match up pretty much exactly.
The Biden administration quietly went to MBS and asked him to end the deal. He refused. There are historical reasons for this, namely that the US (under Trump) had kinda screwed Saudi Arabia over in 2015, 2017 and 2018 but I digress.
So in the US the politics of this were that Republicans were going to pin this on Biden (even though it was a Trump deal) and the Democrats were never going to blame Saudi Arabia. Instead it was just "oil companies are greedy and bad" from a pure short-term politics POV. Nobody brought up the 2020 OPEC deal. And that's wild to me. It just goes to show that US foreign policy is uniparty and a Democratic administration was never going to publicly split with an ally like Saudi Arabia.
So does OPEC matter? Well they were instrumental in enforcing that deal. So you tell me.
[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...
That really does highlight how badly the US is a controlled petrostate, and how different that is to past events where the US goes around demanding that OPEC raise production.
OPEC doesn't adjust production. They set production targets, and then most of the members cheat. For geological reasons it's not even really possible to significantly reducing production on many oil wells without damaging them. Saudi Arabia generally has more freedom to throttle production up or down than other OPEC members.
It looks like for the May-June 2020 cuts, the rest of OPEC+ (excluding Russia and Saudi) accounted for 48% of the cuts. [0]
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...
You have another thing which is that MBS (correctly) felt comfortable ignoring Biden. If he'd slighted Trump in that way it would probably take 2 private jets to undo the damage.
Biden was ready to take on the Saudis and then Russia invaded Ukraine...
Which he responded to feebly.
I see this as a temporary action to contain oil prices, orchestrated by the US.
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.
> I see this as a temporary action
Unlikely. Out of OPEC’s twelve members [1], one is controlled by Trump, one—the third largest—is bombing the UAE and the other—the absolute largest—is on the other side of every proxy war the Emirates are invested in. As a multi-lateral organization it’s about as fucked as BRICS.
[1] https://en.wikipedia.org/wiki/OPEC
The cartel can't even self police. These are like climate pledges.
> 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
This is the US trying to salvage the petrodollar. They want those t-bills and oil priced in dollars to maintain reserve currency status, but the whole world is divesting anyway. UAE is hoping that by leaving OPEC they can continue to do business and get protection from US. But US isn't gonna risk a larger war just to defend UAE, US has plenty of oil to exploit in Venezuela and at home. So UAE is just kinda screwed, and petrodollar will become north-american-petrodollar. My guess is it'll happen by Q1 2027
I’ve developed a simple heuristic: If someone unironically invokes petrodollar as an explanation for anything in 2026, they’re probably not worth taking seriously.
Financial Times: "There’s no such thing as the petrodollar"
https://www.ft.com/content/be345914-7b4b-4264-bcbd-6e5e33b79...
https://archive.is/4rn8t
I am personally convinced that there are many more people pretending to understand geopolitics than people who actually understand. It could be that no one truly understands due to the amount of fractal complexity and emergence.
seriously. instant indicator that their world view is irreversibly warped by tiktok politics.
The petrodollar and petroeuro is misunderstood. The real point: These oil/gas exporting nations don't have enough investable assets in their own nations. As a result, they need to invest overseas. For a long time, the best places to invest this excess capital in the world were/are North America, Europe, and Northeast Asia (Japan/Korea/Taiwan). If you want to say that petrodollar or petroeuro is doomed, what will replace it?
It's not that the petrodollar is doomed, it's just 'devaluing'. The US isn't a stable, safe place for cash anymore. But the world still needs massive amounts of safe cash. So there really is only one alternative: diversify.
They'll diversity into Gold, rare-earth metals (they're only getting more important), CIPS, Yuan, Euro. That diversification helps everyone else, but will hurt the US, which hurts financial markets, and thus everyone else. And once they're all divested, the diversification will add risk and losses. Can't be helped though, they still need security. So we're looking at a generation of slow global decline, probably propped up slightly by the industrialization of AI (which of course China is leading the world in, as nobody cares about "better", they care about "cheaper"). China is the real winner, because all they need is oil, and their partners will make sure they get a steady supply (because it's in their partners' interests; that's what having allies is all about).
US can't stop this; their military isn't equipped to fight wars on multiple fronts, their lumbering, expensive weapons can't be sustained in a protracted conflict, their wars aren't popular at home, and they don't have the manpower. Even when they eventually start the draft back up it'll take years to build up their warfighting capabilities, and by then the world will have diversified enough that they can take the hit. (The US will try a World War anyway to try and retain the Empire, because their leaders are psychotic morons and their people are compliant, but they'll still lose. (Historic parallel: Sparta. Great military, but tiny, so most of their power came from wealth and tenant states; eventually the rest of the mediterranean got tired of their shit (installing dictatorships, alienating allies) and their empire died. Hell, even their Navy was paid for by Persia - foreign investment used to weaken rivals via proxy war))
I don't think this is avoidable. Nobody trusts the US now. The divestment has already begun. Countries aren't suddenly going to change their minds - even if Trump doesn't overthrow the government to cement this new status quo in 2028 (which he 100% will), the next President could be another Trump. Nobody wants to be subject to their insane policies (foreign & fiscal) anymore. So the US isn't a secure place for cash. Nations aren't just going to shrug and ignore it, they're going to act to protect their interests.
To be honest this comment kind of reads like anti-US fanfiction.
>That diversification helps everyone else, but will hurt the US, which hurts financial markets, and thus everyone else.
These are huge jumps in logic, I'm not even sure where to begin. I guess the most glaring question is: If other countries are actively diversifying from US assets as you claim, why would they still be so hurt by a US financial market downturn?
>And once they're all divested, the diversification will add risk and losses.
Since when does diversification ADD risk, and how would losses be incurred?
>which of course China is leading the world in, as nobody cares about "better", they care about "cheaper"
Also a huge claim to make. You'll find plenty of people who want the best models and are pretty price-insensitive, especially among those who get the most economic value out of AI.
I too laughed when I read the response. If anything, the more bat shit crazy the response, the more it validates my original point.
You said it better than I could. The best analogy I could dream up: This post feels like it was written as an editorial for an anti-US newspaper, like The Global Times.About the weak diversification argument: If people really do invest much less into US assets, then other available high quality assets will also become more expensive and result in lower yields. In turn, the US assets will appear "cheap" and attract new capital. This feels like a mirror of the global soybean trade. If China says they won't buy US soybeans (primary used to feed hogs), but buy Canadian or Brazilian, then other buyers just shift where they buy from. In the end, the global demand for soybeans has not fallen, rather a brief game of musical chairs was played.
> If other countries are actively diversifying from US assets as you claim
It's not a claim, it's been reported for years. US foreign exchange reserves are at a 30-year low. Central banks have bought ~900 tonnes of gold in 2025, nearly matching the historic high during the pandemic. Central banks' holdings in gold now surpass US Treasury holdings (and we all know that gold is nearly 5x its price from last year). Poland, Turkey, India, Czech Republic have all been hoarding gold instead of dollars. France repatriated its gold. Saudi Arabia didn't renew their oil-for-tbills protectionist agreement with US in 2024. Big oil deals are now being done in Rupees and Yuan. Canada dumped its US treasuries. BRICS is already operating a new banking system independent of the US dollar. mBridge and CIPS allows China to settle payments with other countries solely in Yuan. Japan made a $75BN swap deal with India to deal in Rupees if it needs to avoid the dollar, with similar deals with Indonesia and Thailand. Japan is also working with UAE on non-dollar oil deals in the future.
> 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?
Because the global economy is one gigantic system of systems standing on top of the US financial system. When the US has a gigantic economic shock it ripples worldwide. But de-dollarization is gradual, so it will be a gradual drawdown in international economies.
> Since when does diversification ADD risk, and how would losses be incurred?
The US is where people put their money because putting it elsewhere was riskier. But now the US might be more risky. So you diversify... to the places that were risky before. So you can only move to risky places. That risk eventually leads to some loss. It's a "least-worst option" situation, but the end result isn't going to be great.
> You'll find plenty of people who want the best models and are pretty price-insensitive
That's now how capitalism works, that's how rich people work. The echo chamber of HN is full of upper-middle-class people with disposable incomes that are happy to waste money to feel emotionally better about their choices. But businesses aren't emotional, they're competitive. They want lower costs and higher profits. That means spending less. If a business can use a model that's 1/6th the price to get approximately the same results, they're going to do that, in order to gain a competitive edge. China is the place you go when you want to cut costs.
Coincidently, FTAV posted a good "petrodollar" article today for anyone interested (article is free but might need a free account to read it): https://www.ft.com/content/a65efb54-306b-49ad-9920-40d59b195...
Wow, this is a great share. I am regular reader of FTAV. I highly recommend it to others here.
I like this part:
And: A lot of online armchair analysts miss the fact that the Euro is just as important as the US Dollar in global trade. The Eurozone has a combined GDP of about two thirds of the US. That is huge! And they Eurozone does lots of trade with countries outside the Eurozone, so the Euro is a vital part of the global economy. The number one forex pair globally is EUR/USD. It is trivial to convert between the two (tight spreads, giant order capacity), so buyers and sellers are fine with either.It does seem like the petrodollar is coming to an end. Even if we wanted to keep killing/abducting the leader of every tiny oil nation shortly after the decide to sell oil in another currency (like we did to Iraq, Libya, and Venezuela), bigger ones we can’t just do that to practically are going to start.
The writing is on the wall. It might take decades, but it’ll end.
> it'll happen by Q1 2027
Which month?
Petrodollar discourse tends to annoy me because people tend to get cause and effect confused.
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.
You say "people tend to get cause and effect confused" and then unironically follow that up with:
> What makes the dollar strong? The US military
The US military and the dollar are strong because the US economy is strong.
Is there an explainer on this? I'm not familiar with the geopolitics or oil cartels well enough to understand the implications here.
My understanding is basically that OPEC is similar to a workers union. Countries band together and set terms that dictate the price and the supply available in the market.
UAE leaving OPEC is like breaking up a workers union. UAE is no longer required to restrict how much oil it exports, and also doesn't have to set a price floor. They're allowed to sell more oil cheaper, potentially at the expense of neighboring OPEC countries.
Which to me sounds like a good thing for the rest of the world?
Ordinarily a Cartel is illegal. If say the US breakfast cereal manufacturers decided to all agree they'll charge a minimum $20 per kilogram, no bulk discounts, the government can and likely will (assuming they don't remember to bribe Donald Trump) prosecute them and force them to stop doing that.
If you've been involved in an SDO ("Standards Development Organisation" think ISO or the IETF although the IETF would insist that they are not in fact an "Organisation" they will admit to being in effect an SDO) you've probably at least glanced at documents explaining that you absolutely must not do anything which looks like Cartel activity, you can't use the SDO to agree prices, or to cut up territory or similar things. The SDO's lawyers will have insisted they make sure every participant knows about this because they don't want to end up in prison or worse.
However the trick for OPEC is that it's a cartel of sovereign entities. It can't be against the rules because its members are the ones who decide the rules. So Chevron and Shell and so on cannot be members of OPEC but the UAE and Venezuela can.
Breakfast cereal has substitutes so it would be unprofitable to do that. But the meaning behind what you're saying was clear nonetheless.
There is no substitute, gotta have my pops.
> Which to me sounds like a good thing for the rest of the world?
It probably isn't a bad thing, but let's not overestimate the beneficial effects. The reason oil prices are high right now isn't because of cartel fuckery, it's because of Trump and his war. And oil supply chains are in such chaos because of Trump's war that even if it ended tomorrow it would take markets multiple years to return to a pre-war state.
The bottom line is that oil prices are going to be elevated for years to come, and when oil prices are high, OPEC has nothing to do other than sit back and collect the profits. And thanks to the ongoing solar revolution, oil's days as the world's predominant geopolitical poker chip are numbered; by mid-century OPEC won't be relevant anyway.
By mid century, worldwide fossil fuel usage will be higher than it is today. Solar will take over some of the electricity production including transportation but in the overall energy mix it will largely be a supplement, not a replacement. Total per capita energy use from all sources will continue to increase at a rapid rate.
> By mid century, worldwide fossil fuel usage will be higher than it is today.
Even if this turns out to be true, it would be irrelevant. The reason that oil occupies the geopolitical role it does today is because of its potential to rapidly bring the entire developed world to a halt. Oil will always be in demand because of its many useful applications (and this demand may even grow in absolute terms despite declining per-capita consumption, because the global human population is projected to continue increasing well into the latter half of the century), but as an energy source, by 2050 it will have so many highly-available complements that an oil cartel will be as relevant as a potato cartel.
The potato cartel seems to be at least somewhat effective.
https://www.cbc.ca/news/world/potato-cartel-fries-tater-tots...
That’s similar to unions in general, but of course workers unions was the first thing out of the hat.
The basics are the same as any other cartel. OPEC states cover enough of the supply-side of the market to be able to keep prices artificially high.
UAE leaving means UAE can price below OPEC's target and take more of the market. OPEC will have to react and lower prices or concede some of the market.
Does any of this matter if the major players can't ship oil through Hormuz? Who knows...
OPEC was never a very effective cartel in the first place. Many of the members routinely exceeded production targets. And for geological reasons it's not like most oil wells can even be throttled down.
Storage facilities allow for market supply control.
And while it's true many member exceed targets, it's like speeding on US highways: everyone does it, but anyone driving 20 mph faster than the pack is nobody's friend. Karma will happen.
None of the OPEC+ members have sufficient storage facilities to allow for meaningful market supply control. And karma isn't a real thing: most OPEC+ members are more like rivals then real allies. They'll agree to one thing and then do another, secure in the knowledge that there will be no serious consequences.
The UAE is trying to expand its ability to ship oil through Fujairah, so this could potentially undermine both KSA/Iraq and Iran.
OPEC is a cartel of Arab oil-producing countries, including UAE. They limit production in order to keep the world oil price artificially high. UAE is pulling out of the cartel, presumably so it can bypass the restrictions and cash in on the high prices caused by the Iranian conflict. AFAIK this is the first time a country has pulled out of OPEC, and hopefully, it will lead to its demise.
> OPEC is a cartel of Arab oil-producing countries
"In 1949, Venezuela initiated the move towards the establishment of what would become OPEC, by inviting Iran, Iraq, Kuwait and Saudi Arabia" ...
> OPEC is a cartel of Arab oil-producing countries, including UAE.
Nigeria joined OPEC in 1971.
> its demise.
OPEC or UAE?
OPEC
The very short explanation is that they kind of want to be not-Saud and has trouble cooperating with Saudi Arabia for a rather long time, not just over fossil fuels but also in Yemen.
Recently the UAE faction in Yemen was forcefully reined in by the house of Saud, and OPEC kind of prioritises different things than the UAE, i.e. not pushing profits hard in the short to medium term instead focusing on stability and predictability.
Currently the saudis are trying to resolve the Hormuz issue and the attack on Iran through diplomacy, which the UAE is not exactly fond of and would rather see a violent solution. In part this is coloured by the close relation between the UAE and Israel, both of which share the view that running militant factions in failed states is preferable to orderly international relations between sovereigns. The saudis aren't as keen on this type of foreign policy and in other aspects also not as friendly with Israel as the UAE.
The UAE has been signaling that they don't really want to be a part of OPEC since at least 2020 or so. Them actually leaving was to be expected, the question should have been 'when' rather than 'if'. Iranian retaliations on the UAE and subsequent damage to the reputation of mainly Dubai and Abu Dhabi as well as capital flight probably strengthened the UAE politicians longing to get out of OPEC and start pumping and selling at full capacity to try and make as much money as possible as fast as possible.
If the UAE does not do this it'll be more exposed to credit and currencies besides the US dollar, which they probably find rather inconvenient.
Didn’t we see reports that Saudi Arabia was supporting and pushing Israel and U.S. to attack Iran?
Americans were leaking that Saudi Arabia was pushing for the attack. Saudi Arabia was leaking that the leader pushed against the attack. Then there was a leak about them wanting USA to finish the job and just maybe, they were for it.
It all depends on how Saudi wants to be seen in the moment and what Trump thinks makes him look better in the moment.
But like, Saudi gave Americans golden planes and extraordinary amount of bribes, so one would assume they were buying something.
That was "anonymous sources".
The goal is a full regional war orchestrated by Israel. That's what is playing out here.
Slowly weakening remaining Arab states and setting them up to fight each other.
The various Arab tribes or kingdoms had a long and bloody history of fighting each other going back before Israel even existed.
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?
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.
Probably Saudi Arabia is more important in OPEC, so that might be actually a middle finger to SA. Saudi Arabia and UAE had a recent dispute in Yemen that went pretty hot.
An alternative is the US trying to dismantle OPEC together with its new found supply in Venezuela to drive prices down
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.
They don’t have production limits anymore, and can produce and sell as much oil as they have capacity for.
Ok but:
- 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?
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.
1) any sources for 'is being ramped up significantly'? To what capacity? 2) how much are you willing to bet? :-) 3) selling them arms and then causing a conflict where they expend those arms is a protection racket, not a help 4) stating claims does not make them true. Is it in their interests for the oil prices to collapse? It is a classical prisoner's dilemma. Coordination helps all of them. Being on their own allows external players to target/influence each of the small ones separately, at their weakest. Classical divide and conquer.
You can easily find out all the details you want if you had cared to do your own research from the links/data that i had given you using your favourite search engine+AI chatbot. Instead you are just repeating yourself and expecting to be spoon fed. Moreover you are just spouting your own fanciful opinions ("protection racket"/"oil prices collapse" etc. really?) which have no bearing on reality.
However, for your edification;
The wikipedia page for ADCOP i had given above, lists a whole set of links from where you can get more info. and data. One main source is the website of ADNOC (https://www.adnoc.ae/) who owns/operates ADCOP. The UAE has been calling in loans (eg. $3.5billion from Pakistan), asking the US for money (links given above) etc. all towards having enough to ramp up production to 5 million bpd by 2027. The defence cooperation between the UAE and US is longstanding, with the recent war merely ramping it up. The OPEC/OPEC+ is just a cartel which should have been broken up long ago.
The UAE’s Energy Playbook Is Paying Off Amid Global Turmoil - https://oilprice.com/Energy/Crude-Oil/The-UAEs-Energy-Playbo...
UAE To Hit Its Oil Capacity Increase Sooner Than Expected - https://oilprice.com/Latest-Energy-News/World-News/UAE-To-Hi...
Will the Iran war end Strait of Hormuz oil supremacy? - https://www.dw.com/en/iran-war-strait-of-hormuz-oil-supply-r...
In bid to bypass Hormuz chokepoint, Gulf countries scramble to ramp up infra - https://archive.ph/Xh1aq#selection-669.0-669.76
I think we are talking past each other.
The increase in production capacity is irrelevant if you don't have a way to export the said production.
My question was specifically about the increase in the pipeline's capacity. Because your statement "As pointed out above Hormuz is being bypassed with ADCOP's capacity being ramped up." does not make sense otherwise.
Chatgpt tell me this this: Short term: increase ADCOP from ~1.5 → ~1.8–2.0 mb/d (confirmed and achievable) Medium term: expand storage and export infrastructure at Fujairah Long term: build additional pipelines/corridors alongside ADCOP
Short term is too small. Medium term does not help with the throughput, just better buffering. And the long term is, well, long term (= many, many years).
Why could something that might happen many years in the future force the Iran to open Hormuz now?
The thing is, 5-10 years from now the importance of oil will be greatly diminished, as this oil shock will result in much greater push for decarbonisation than all climate summits combined (and the technology -- mostly solar and long distance DC lines - is essentially ready, at a reasonable cost). The gulf states see this, so I am not 100% sure all those pushes for extra pipelines will come to fruition, once the Iran war cools down.
No, we are not talking past each other ;-)
You simply are not understanding my comments nor reading the provided informative links.
There are three things to consider viz. 1) Production Capacity i.e. new wells/sources 2) Pipeline Capacity i.e. pipeline bandwidth and no. of pipelines 3) Storage Capacity i.e both at terminal/port and distributed worldwide.
The Iran/Strait of Hormuz problem was foreseen long ago and the UAE specifically has been working on all three of the above. ADCOP construction was started March 2008, completed March 2011 and operational in June 2012. That gives you an idea of how fast things moved.
The last link about infra above lists some possible ways to increase pipeline capacity which in the case of UAE is actually Short/Medium term (easily within 5 years) viz;
... as well as enhancements or parallel lines to the UAE’s ADCOP pipeline to Fujairah,” said Kpler oil analyst Grabenwöger ... In terms of timing, the UAE probably has the most flexibility to move relatively quickly on incremental projects ...
There is also talk of extending ADCOP to the nearby Omani port of Duqm.
Conlusion:
“Five years from now, the Persian Gulf will have far better bypass options than it does today. No matter what the US and Iran agree over the future of Hormuz, the strait’s status will change. But the waterway will never be as critical to the global economy as it was when the fighting started six weeks ago,” Blas wrote.
> The thing is, 5-10 years from now the importance of oil will be greatly diminished
This line tells me you have no idea of the Petroleum industry and its importance to the modern world. Our dependence on Oil will not go away in the next 50 years nor even 100 years. As an example, look up "Naptha shortage" to understand how vital the byproducts of crude oil refining/distillation are to our modern industries. There are over 6000 petrochemicals ! (https://en.wikipedia.org/wiki/Petrochemical) Renewables only help with alternative energy sources, and given the way we have built our modern industries around petroleum they cannot meet all our needs. They can bring down our reliance on Oil but it is very longterm.
Great news, I hope this will finally crash russia, just like the same events back in the 80s caused soviet empire collapse.
an interesting variable in all this is China. the whole crisis, and maduro being kidnapped by his american counterpart dictator, has left them only russia left as a major source of petroleum overseas.
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.
> has left them only russia left as a major source of petroleum overseas.
China is currently importing 1.6M barrels/day from Brazil
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).
archive for the Reuters article
https://archive.ph/uSXJx
This is how peak oil happens. Without a healty cartel, oil is doomed. Solar, wind, geothermal, hydro, nuclear. These are more than ripe to disrupt energy into the 21st century.
> Without a healty cartel, oil is doomed
Why/how?
Without a healthy cartel, wouldn't prices go down? Cheaper oil means less adoption of alternate energy sources.
The goal of the cartel was to stabilize prices right in the sweet spot to keep the world addicted. Too low and players start losing money, too high and people switch away from oil, too much volatility, and people switch away from oil.
> Too low and players start losing money
Only the non-competitive ones. That's how competition works.
OPEC would be deemed an illegal anti-consumer price fixing scheme under the laws of any country with even the most basic of anti-trust laws, if not for the fact that its entirely composed of sovereign countries not subject to any law but their own.
If the price is too low and fields stop being exploited because they're unprofitable, you reduce the volume produced each day. That means there's scarcity with a low price, and you're back at trying to switch en energy source because you just can't get oil.
That moves prices upward, because people are willing to pay more, but increasing production is not like turning the faucet in your home. It takes time. This is the instability of oil production that OPEC tries to prevent, to keep the world hooked on readily available just cheap enough oil.
In a free market "scarcity with a low price" is a contradiction. If there's scarcity the prices will be high, not low. And nobody's going to be reducing production if the prices are high.
> instability of oil production that OPEC tries to prevent
First of all, if the goal is to prevent instability OPEC is doing a terrible job. Secondly, a cartel is not needed to prevent price instability, as demonstrated by the hundreds of other commodity markets around the world which are not controlled by cartels engaging in price fixing schemes.
As with any cartel, the purpose of OPEC is to maximize profits for its members, artificially fixing the price of oil at a level higher than what it would otherwise be in a free market not controlled by a cartel. Price stability is a side effect of that, not the goal.
> First of all, if the goal is to prevent instability OPEC is doing a terrible job.
I mentioned this upthread, the instability OPEC is trying to prevent is civil unrest from not being able to fund their social programs and governments. They need a price that puts them in the black and the rest of the world will pay. If it was a free market the fracking boom would still be raging and oil would be $30/bbl. Many gulf nations would fall apart if oil was at that price for a long period of time hence the price manipulation. (I'm not sure how they got the frackers to ease up, some say many of the frackers were bought out by OPEC members and their wells capped but that's just conspiracy afaik)
> The goal of the cartel was to stabilize prices right in the sweet spot to keep the world addicted.
If the price of oil remains low the gulf governments can't fund their social programs and risk instability. That may not be the only reason for OPEC but it's a major one.
When fracking really took off the writing was on the wall and I think many OPEC nations have since taken serious measures to shield themselves from price drops. This is probably why the UAE can now feasibly leave OPEC. I thought the fracking boom was the end of OPEC but they managed to hang on.
The prices would go down too much, and then infrastructure would rot as production slows down. Then, prices would skyrocket, and so on.
Oil production and distribution is basically infrastructure, like energy or internet. It can't really follow free market dynamics without eating itself.
A healthy cartel means consistent oil prices. Without it, oil may average cheaper over the long term (and almost certainly over the short term), but there will be a lot more variance.
Ok? If you can’t have price variance buy futures. Price variance doesn’t matter for consumers, just average price.
Price variance matters a lot for consumers, especially gas/oil.
I guess the silver lining from this mess is that maybe some more governments realize they don’t want their energy policy to force them into a recession every time there’s a conflict in the Middle East
how is the cartel not healthy? uae is 12%
> Solar, wind, geothermal, hydro, nuclear. These are more than ripe to disrupt energy into the 21st century.
Yes and we've seen negative electricity price in some EU countries a few days ago: very sunny days but not too warm, perfect for solar panels. Supply surpassing consumption: negative electricity prices.
While we're, supposedly, living through an energy crisis. There may oil shipment issues and there are issues with energy due to the Russia/Ukraine war too but... Many already understood that there were solutions to not be entirely dependent on oil.
Doomsayers are going to argue that "we need electricity during the winter at 6 pm" so a "largely negative electricity on a sunny sunday means nothing" (Belgium, two days ago: hugely negative electricity prices, for example and it's not the only case) but the truth is: we're not anywhere near as dependent on oil as we were during the Yum Kippur war / 1973 oil shock.
And oil is definitely limited in how high it can go for as soon as it goes up, suddenly other energy source make more and more sense economically.
Once again: negative electricity prices two days ago. Let that sink in.
The problem is that grid scale power plants can't just turn on when the sun isn't shining. If the negative prices during the day and positive prices at night lead to energy storage, then it's a solution. Otherwise, it's just a glut at some times of day.
This is where grid scale batteries come in. Looking forward to that. (As long as they can avoid blowing up like the one in Monterey…)
>The problem is that grid scale power plants can't just turn on when the sun isn't shining
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
"Days" is too long when you need power at night. Coal and gas combined cycle plants take too long just like nuclear.
Turbines could work. But that's not the majority of plants.
Is this as a function of the Iranian war?
I think they just want to pump as much as they possibly can to cash out now while they can.
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...
They also build out more nuclear power than all of the west comnined: https://en.wikipedia.org/wiki/Barakah_nuclear_power_plant
Earth is going to run out of oil in 50 years at current rates. One way or another, the status quo is going to change.
The world will never run out oil supply, demand will likely go first.
There are dozens of ways to increase production through world peace, better drilling technology and ideological conversion. Most of African production is well below geological potential (Libya being the easiest example, but also applies to Nigeria and the DRC etc). European shale is barely investigated, Russia is restricted by sanctions, the Middle East by war. Antartica and the Falklands are relatively unexplored but feasible.
However, the electrification of transport will erode demand in everything besides heavy shipping and jet fuel. Without that demand oil prices will crater.
> The world will never run out oil supply, demand will likely go first.
Not sure I buy that. Oil will still be in demand as a chemical feedstock. In fact, there are already people saying that oil is too precious to use as a fuel.
Some oil fields also produce Helium. That's actually an element we don't have plenty of anyway. But most don't do that, the toxic black goop they're producing is almost all just a mess of Hydrogen + Carbon chains. Similarly "Natural gas" ie Methane is just CH4.
If we have plenty of energy anyway we can just make exactly what we need, no need to drill for a mix of pot luck hydrocarbons. If we don't have enough energy anyway then we're burning hydrocarbons to get energy and we might as well use them as a feedstock too.
Oil will only be in demand as a chemical feedstock as long as it's economically competitive with the alternatives. There's a substitute for virtually every petrochemical process if oil becomes scare (or expensive) enough.
Substitution is highly impractical in the short term but in a conversations of decades/centuries it's significant. Venezuela's reserves alone could run the world's petrochemicals for 60 years (Gemini) so it's a realistic perspective. Together with other proven reserves we could be okay for centuries.
Recycling is sometimes an option too.
The prediction has been "by around 2050" since forever¹. Any time people find a way to increase reserves, flow rate increases to compensate, and the prediction stays approximately the same.
That's to say, I think you forgot to update your number when time passed.
1 - time started at the 1970s, that's a well known fact
No it isn't!
UAE/Saudi tension over quotas predates it by years, but certainly gave a good excuse to execute leaving.
Worst case for the Middle East - OPEC is disolved.
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.
It was given by Qatar not the UAE.
They represent 4.5% of oil production it seems. It will be interesting to see what this means longterm.
"Oil" is not a homogeneous thing. There are different grades of oil and refineries are built to process specific grades of oil. UAE produces the so-called "Dubai Crude" oil grade, which is very sought after.
Probably not much unless others follow suite.
It could be the first domino. They do have a port on the Gulf of Oman fed by a pipeline from their major fields well inland. This may turn out to be minimal for the world, but it could be huge for the UAE and their major customers.
4.5% most likely capped to meet OPEC agreements. There's no ceiling now (although, it will obviously not be 100% or even close).
Even if the UAE increases crude oil production, wouldn’t it have little impact on oil prices if the Strait of Hormuz isn’t open?
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.
is there a vested interest for usa and our war partner ?
This is titanic, earth shattering news. The breakup of the OPEC cartel would be on the best things to happen to humanity this century.
> 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.
Paul Krugman consistently claims that there is not much benefit from it that would be visible in data. That seems to me consistent with what economists say in general.
If there is benefit it is small. It is mostly symbolic - petrodolar is a symbol of a power and people react to it.
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.
I believe it to be possible to vote for someone and also not be 100% aligned with every outcome they bring about.
In fact, it may even be possible for this to be more in line with the vision of people who did not vote for Trump than the people who voted for him.
If you look at presidents historically, there are some occasions where the vision they described during the campaign to get votes is not in fact the vision they bring about while governing.
Also - what is your presumption of what my vision of the USA might be?
Nobody wanted a war in Iran, recall how Trump wasnt going to start any new wars? We are in this conflict bc of Zionists - it had nothing to do with US interests at all.
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.
What's a good investment vehicle for broader energy transition?
There are quite a few "clean energy" ETFs (e.g. GRID, PBD, ICLN). There are nuclear/uranium themed ones too. No comment/view on whether any of those are good or not.
NEE, trades like a bond. They do financial derivatives with carbon credits (sorta)
To anyone wondering, yes this is a consequence of the War in Iran but what this means isn't exactly clear. Or rather the consequences aren't clear.
For a super brief background, the US has what's been called an oil-for-security deal with Saudi Arabia since 1945. The US supports the Saudi royal family and Saudi Arabia keeps the oil flowing, which has largely been the case (other than 1973). Saudi Arabia remains the "big dog" in OPEC. OPEC+ is really about Russia even though it also includes Kazakhstan and Mexico. Russia became a major oil producer and exporter in the last 20-30 years.
OPEC generally likes stability in oil prices. How it works now is that every 3 months they meet and figure out what the demand for oil will be and adjust production based on that projection to maintain both a price floor and a price ceiling. Prior to this conflict that range was $70-80. Each member gets a share of that production. OPEC hasn't always been successful in policing member countries who have at times exceeded their production targets and also lied about production cuts.
Gulf countries now are utterly dependent on US arms to maintain their (typically unpoular) despotic regimes (usually monarchies). The UAE is particularly belligerent here. I view Dubai as a cleaner, shinier Mos Eisley. The UAE is directly responsible for the genocide in South Sudan. US arms are diverted to the RSF in exchange for illegally smuggled gold to Duabi that gets laundered via Switzerland [1]. Dubai is a terrible place.
Beyond Russia's rise as a major energy exporter, the US also became one in the last 15 years, particularly in 2015 when the export ban was lifted on crude oil (which had been there since the 1973 oil shock). OPEC countries are generally unhappy about this development because every barrel the US exports tends to be 1 barrel OPEN doesn't. But they're also largely powerless to do anything about it.
The Iran War is a massive strategic blunder by the US because it's shown the US has been unable to stop Iran from closing the Strait of Hormuz despite spending $1T+ a eyar on its military but, just as bad, it's shown that the US cannot or will not defend GCC countries or even its own bases in those countries from Iranian counterattacks.
Foreign countries generally pay for US bases as part of a broader security agreement and the idea of joint responsibility for security guarantees. But what if those guarantees are essentially worthless? This will completely reshape the US relationships with GCC countries. The UAE is really just the first domino to fall.
Short-term this smells like the US is either behind this break or at least approves of it. The idea is probably for the UAE to increase production in an effort to stabilize oil prices. This administration has also shown a complete disregard for historic alliances (including NATO) and they probably view OPEC as a cartel they want to break up. But I think this will long-term further destabilize the region and I wouldn't be surprised if some of these governments end up falling or at least break security ties with the US.
If anything, GCC countries will likely see China as a more reliable and stable trading and security partner as a result of all this.
[1]: https://www.democracynow.org/2025/1/28/sudan
> Short-term this smells like the US is either behind this break or at least approves of it. The idea is probably for the UAE to increase production in an effort to stabilize oil prices. This administration has also shown a complete disregard for historic alliances (including NATO) and they probably view OPEC as a cartel they want to break up.
I've seen reporting over the past week or so regarding the US potentially bailing out the UAE to make up for the financial harm and damage it's suffered due to the US-Iran war. How likely do you think it is that the UAE leaving OPEC is a condition for that financial assistance?
I believe that this administration more than any other post-WW2 administration either has a complete disregard for alliances or is actively seeking to shatter them even though most of them were designed by the US for US interests (eg NATO).
So yes, I can see this admin seeing OPEC as a cartel that is against US interests even though OPEC actually stabilizes global oil prices, actively. I also believe it's highly likely that the US wants to crash the global oil market when the Strait eventually reopens ahead of the midterms.
I too have seen the reports of a potential US UAE bailout and that could be leverage here. It's too early to say. It'll take time to realize the consequences of this deal and understand what led up to it and what the real goals are.
The whole war goes beyond miscalculation. It's the worst strategic blunder in US history (IMHO) and it's not even close. In 1973, the worst impacts happened 6 months after the blockade started. Well, guess what's in 6 months? The midterms. Iran is acutely aware of the US domestic politics of this. Iran also knows this is their best possible chance to end economic sanctions. Iran is more prepared to wait this out. Their goal really is to make the cost of this war so high that the US will never again think about repeating it.
how will they get the oil out of the Gulf?
The UAE has some facilities to export on the outside of the Gulf and they can ship I believe ~1.8Mbpd on the ADCOP (Abu Dhabi Cross Oil Pipeline). That's only a fraction of their 4-5Mbpd production and I'm sure they're already using it so short-term I don't think it matters so much.
But when the Strait does open, which will happen eventually, the UAE will probably go to town so to speak, exporting well above what they might've otherwise as an OPEC member.
My suspicion is that this is what the UAE's move is really about and whY I think the US is giving at least tacit approval if they're not outright behind it.
UAE is toast, it's glitter was just influencers and glass in the desert, resting on the flow of oil.
Well, looks like that was the price for getting the USD swap line. Milkshake theory won't last long, just like the petro dollar.
Okay this I did not see coming... If it actually happens it's going to cause a alot of ripple in the energy market. Good or bad? Hell if I know.
Iran lets oil traded in Yuan to navigate the Strait. OPEC sets prices in Petrodollars. What is the point of staying in OPEC then? Qatar is not part of OPEC so they were able to trade freely in Yuan.
Leaving OPEC right now means little short-term with so much production shut-in. Long-term, the UAE may cease to exist if this war goes on. Its population is 80%+ guest workers, it's totally dependent on desalination, food imports, and oil/gas exports and is incapable of defending itself on its own.