Economy

Updates on the state of the economy, growth, inflation, and employment.

Energy

Energy
Six decades in, UAE quits OPEC at the worst possible time
The United Arab Emirates announced on 28 April that it would leave OPEC and the wider OPEC+ alliance effective 1 May, ending nearly six decades inside an organisation it joined through Abu Dhabi in 1967. Brent and WTI first dipped 2 to 3% on that headline before rebounding above US$112 and $105 a barrel respectively as Iran-related risk premiums reasserted themselves within hours. For a body that nominally sets supply policy across a third of global crude, that response was quietly damning - traders barely flinched because quotas have not been the binding variable for months. Read the exit as a window into oil-market plumbing - OPEC's ritualistic song and dance now matters less than a 21-mile chokepoint between Iran and Oman.A six-decade exitThe UAE was OPEC's third-largest producer behind Saudi Arabia and Iraq, pumping above 3.4 million barrels per day before late-February's escalation of the Iran war disrupted Persian Gulf flows. Energy Minister Suhail Al Mazrouei told CNBC the timing was deliberate to minimise impact on the rest of the group, framing the decision as a policy choice rather than retaliation against Riyadh. Tensions had been building for years over a quota of roughly 3.2 million b/d that sat well be
Energy
US gas prices may not drop below $3 until 2027: Wright
United States gas prices may not fall below US$3 per gallon again until 2027, Energy Secretary Chris Wright said, as the Iran war continues to disrupt oil shipping. The national average gas price is $4.048 per gallon today, per AAA, up from $2.90 at the beginning of February. The Strait of Hormuz, where about one-fifth of global oil shipments would usually transit, remains closed amid both Iranian attacks on ships and a U.S. blockade of Iran’s ports. “That could happen later this year. That might not happen until next year,” Wright told CNN’s State of the Union when asked when gas prices could drop below $3. “But prices have likely peaked and they will start going down. Certainly, with a resolution of this conflict, you will see prices go down.” Wright claimed that ships would be able to pass through the strait after the U.S. and Iran reach a peace deal, saying that this “won’t be in the too-distant future”. The countries’ two-week ceasefire remains in effect. The U.S. will send a delegation to Pakistan on Monday for potential peace negotiations after abandoning a previous round of talks, though Iran has said it does not plan to participate in this week’s discussions. U.S. Treasury Secretary Scott Bessent had sai
Energy
Europe could run out of jet fuel in six weeks
The International Energy Agency (IEA) warned that Europe only has “maybe six weeks or so” of remaining jet fuel due to oil shortages caused by the closure of the Strait of Hormuz. IEA executive director, Fatih Birol, said that there would be flight cancellations “soon” if oil supplies from the Middle East were not restored within the coming weeks. “I can tell you soon we will hear the news that some of the flights from city A to city B might be cancelled as a result of lack of jet fuel,” he said. Dutch airline KLM said it would cut 160 flights in the coming month due to the high kerosene jet fuel prices. While this accounts for less than 1% of its schedule, the cancellations underline the financial pressure on the airline industry. This concerns a limited number of flights within Europe that, due to rising kerosene costs, are currently no longer financially viable to operate. There is no kerosene shortage. “KLM expects a busy May holiday period and is making sure passengers can travel to their holiday destinations as planned.” Birol also said the global repercussions of the war in Iran could lead to “the largest energy crisis we have ever faced”, stemming from the pinch-off of oil, gas and other vital supplies
Energy
Is the Iran war fuelling the Petrodollar’s decline?
Does United States President Donald Trump’s sustained war with Iran represent a circuitous attempt to stanch the continued decline of the petrodollar – aka U.S. dollars earned by countries through oil exports – one of the lingering remnants of U.S. exceptionalism, which was elevated at the end of World War II? Much of the noise and hype surrounding the Iran War is focused on a reopening of the Strait of Hormuz. Meanwhile, what’s often overlooked is that while around 80% of global oil trades are still U.S.-dollar-denominated, there are already efforts in play by China, Russia and the BRICs trading block to diversify away from the U.S. dollar, which, among other things, would enable them to avoid financial sanctions. Efforts by China to launch yuan-denominated crude oil futures clearly threaten to undermine the petrodollar, and this is something that the U.S. administration prays never happens. If oil were no longer traded in U.S. dollars - marking the end of the "petrodollar" system - the U.S. economy would likely face significant structural shifts, primarily driven by a decrease in global demand for the greenback. In short, the U.S. would risk losing what's often regarded as its “exorbitant privilege”, which could c
Energy
Iran’s oil gambit is rewriting global economic power
Not by any measure could Iran be framed as winning the war against the United States and Israel, now well into its second month. However, its control over the flow of oil, which has far-reaching consequences for the global economy, has potentially elevated the worldwide gravitas of the Persian state to a level it could only have imagined a few weeks ago. So much so that Robert A Pape, a military and international security expert, believes actions by the U.S. and Israel have not only ingloriously backfired but accidentally gifted Iran the economic leverage to become a major world power. Underpinning Iran’s ascent to a centre stage of global power is, of course, its ability to preside over the Strait of Hormuz. Assuming Iran’s control over the passage of ships through the Strait persists for months or even years, Pape foresees a drastic reshaping of the global order, much to the detriment of the U.S., which has struggled to maintain its status as a global superpower since the early 1990s. Clearly, much of this speculation is contingent on how long Iran’s grip on the Strait – which accounts for a fifth of world’s oil supply – can last.A strait controlled without being closedWhile there’s a widespread expectation that U.S.

Economy

Energy

Six decades in, UAE quits OPEC at the worst possible time

US gas prices may not drop below $3 until 2027: Wright

Europe could run out of jet fuel in six weeks

Is the Iran war fuelling the Petrodollar’s decline?

Iran’s oil gambit is rewriting global economic power

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