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UAE to leave OPEC

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Re: UAE to leave OPEC

#101

Post by mothballed »

weard_beard wrote: post #93
mothballed wrote: post #37

Earlier quoted context omitted.

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).

Re: UAE to leave OPEC

#102

Post by HWR_14 »

cj wrote: post #49
1970-01-01 wrote: post #40

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.

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.

Re: UAE to leave OPEC

#103

Post by jmyeet »

woodruffw wrote: post #53

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.

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...

Re: UAE to leave OPEC

#104

Post by cogman10 »

> 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.

Re: UAE to leave OPEC

#105

Post by aprilthird2021 »

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?

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

Re: UAE to leave OPEC

#106

Post by Tade0 »

joshuaheard wrote: post #50
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.

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, including UAE.

Nigeria joined OPEC in 1971.

Re: UAE to leave OPEC

#107

Post by defrost »

quietbritishjim wrote: post #80
defrost wrote: post #62

Earlier quoted context omitted.

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.

Re: UAE to leave OPEC

#108

Post by HWR_14 »

TacticalCoder wrote: post #64
1970-01-01 wrote: post #40

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.

> 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 issue…

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.

Re: UAE to leave OPEC

#109

Post by netdur »

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

Re: UAE to leave OPEC

#110

Post by trollbridge »

ReptileMan wrote: post #61
pjc50 wrote: post #42

Earlier quoted context omitted.

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.

In the Middle East everyone fights with everyone else and everyone is in covert or open alliance with everyone else. Simultaneously.

And for extra fun, the U.S. sometimes likes to jump into the fray.
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