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UAE to leave OPEC

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Re: UAE to leave OPEC

#91

Post by diogenes_atx »

delecti wrote: post #74
JumpCrisscross wrote: post #20

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 G…

> 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?

[dead]

Re: UAE to leave OPEC

#92

Post by dmix »

energy123 wrote: post #38
juujian wrote: post #8

Earlier quoted context omitted.

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…

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.

Re: UAE to leave OPEC

#93

Post by weard_beard »

mothballed wrote: post #37
weard_beard wrote: post #25

Earlier quoted context omitted.

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.

Re: UAE to leave OPEC

#94

Post by seydor »

jmyeet wrote: post #34

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 "b…

how will they get the oil out of the Gulf?

Re: UAE to leave OPEC

#95

Post by [deleted] »

delecti wrote: post #74
JumpCrisscross wrote: post #20

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 G…

> 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?

[deleted]

Re: UAE to leave OPEC

#96

Post by ceejayoz »

wat10000 wrote: post #87
bilegeek wrote: post #82

Earlier quoted context omitted.

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.

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.

Re: UAE to leave OPEC

#97

Post by dueltmp_yufsy »

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.

Re: UAE to leave OPEC

#98

Post by keybored »

cj wrote: post #29
eykanal wrote: post #9

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 OPE…

That’s similar to unions in general, but of course workers unions was the first thing out of the hat.

Re: UAE to leave OPEC

#99

Post by tialaramex »

cj wrote: post #29
eykanal wrote: post #9

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 OPE…

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.

Re: UAE to leave OPEC

#100

Post by marcosdumay »

bawolff wrote: post #27
dgrin91 wrote: post #5

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.
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