[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

[Havoc]

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

[eightysixfour]

> 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...

[Havoc]

Indeed it’s leverage but at same time they only need the swap because all is not well in petrodollar land.

[eightysixfour]

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.

[fakedang]

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.

[eightysixfour]

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.

[greenavocado]

They may think it's leverage until they are glassed by the empire for not toeing the line

[nimbius]

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.

[ericmay]

> 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...

[nimbius]

> 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.

[ericmay]

> 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.

[negura]

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

[watwut]

> 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.

[ericmay]

> 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.

[toraway]

  > 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.

[watwut]

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.

[ApolloFortyNine]

>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.

[watwut]

> 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.

[nephihaha]

Psst... It's a "strait" not a "straight". Strait refers to a narrow thing like a straitjacket. Straight means something which is not curved.

[nephihaha]

* 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.

[ericmay]

Thanks for the correction! I totally goofed on that one. I appreciate it.

[asah]

"only the paranoid survive"

[ericmay]

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.

[MattDamonSpace]

“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

[elictronic]

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.

[lotsofpulp]

>UAE announced this week they might start selling oil in yuan

I have read this headline dozens of times in the previous 30 years.

[Havoc]

I don’t think the gulf is in same as always mode right now

[Pay08]

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.

[Ar-Curunir]

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

[thinkcontext]

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?

[Eisenstein]

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?

[Cyph0n]

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?

[bluGill]

Someone has at several different points. It isn't always the same someone, but someone.

[Cyph0n]

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).

[thaumasiotes]

Russia-led? Russia isn't even part of OPEC.

[MobiusHorizons]

I believe they are in opec+

[willchis]

That's the ad-free version, it's an extra $12.99 a month.

[WorldPeas]

it's not really worth it after the recent price-hike, they aren't putting out content like they used to

[Pay08]

Is "polic" a word?