| ▲ | eykanal 20 hours ago |
| Is there an explainer on this? I'm not familiar with the geopolitics or oil cartels well enough to understand the implications here. |
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| ▲ | cj 20 hours ago | parent | next [-] |
| 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? |
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| ▲ | tialaramex 19 hours ago | parent | next [-] | | 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. | | |
| ▲ | energy123 18 hours ago | parent [-] | | Breakfast cereal has substitutes so it would be unprofitable to do that. But the meaning behind what you're saying was clear nonetheless. | | |
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| ▲ | kibwen 19 hours ago | parent | prev | next [-] | | > 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. | | |
| ▲ | nradov 18 hours ago | parent [-] | | 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. | | |
| ▲ | kibwen 18 hours ago | parent [-] | | > 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. | | |
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| ▲ | keybored 19 hours ago | parent | prev [-] | | That’s similar to unions in general, but of course workers unions was the first thing out of the hat. |
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| ▲ | alistairSH 20 hours ago | parent | prev | next [-] |
| 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... |
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| ▲ | nradov 20 hours ago | parent | next [-] | | 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. | | |
| ▲ | IAmBroom 14 hours ago | parent [-] | | 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. | | |
| ▲ | nradov 11 hours ago | parent [-] | | 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. |
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| ▲ | mminer237 17 hours ago | parent | prev [-] | | The UAE is trying to expand its ability to ship oil through Fujairah, so this could potentially undermine both KSA/Iraq and Iran. |
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| ▲ | joshuaheard 20 hours ago | parent | prev | next [-] |
| 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. |
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| ▲ | yubblegum 19 hours ago | parent | next [-] | | > 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" ... | |
| ▲ | Tade0 19 hours ago | parent | prev | next [-] | | > OPEC is a cartel of Arab oil-producing countries, including UAE. Nigeria joined OPEC in 1971. | |
| ▲ | seydor 19 hours ago | parent | prev [-] | | > its demise. OPEC or UAE? | | |
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| ▲ | cess11 20 hours ago | parent | prev | next [-] |
| 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. |
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| ▲ | yalogin 20 hours ago | parent [-] | | Didn’t we see reports that Saudi Arabia was supporting and pushing Israel and U.S. to attack Iran? | | |
| ▲ | watwut 32 minutes ago | parent | next [-] | | 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. | |
| ▲ | cess11 19 hours ago | parent | prev [-] | | That was "anonymous sources". |
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| ▲ | CommanderData 20 hours ago | parent | prev [-] |
| 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. |
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| ▲ | nradov 20 hours ago | parent [-] | | The various Arab tribes or kingdoms had a long and bloody history of fighting each other going back before Israel even existed. |
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