The secret meeting that launched OPEC

Summary

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Episode Summary: "The Secret Meeting that Launched OPEC"

Podcast: Planet Money (NPR)
Date: May 13, 2026
Host: Nick Fountain
Notable Guests: Anna Robino (biographer, expert on Wanda Jablonski), Ibrahim Almohana (former Saudi oil advisor), Kate Durian (veteran OPEC reporter)
Listener Question: Valerie Berecki

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Brief Overview

This episode unpacks OPEC's origins and impact by answering a listener's fundamental question: “What is OPEC, and how does it influence oil prices?” Through a gripping origin story, expert interviews, and clear economic insights, host Nick Fountain demystifies OPEC’s inner workings, the history of collusion in oil markets, and the recent departure of the United Arab Emirates (UAE), tying it all back to real-world consequences at the gas pump.

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Key Discussion Points & Insights

1. Why Does OPEC Exist? (03:29 - 10:28)

• Listener Valerie asks for an "explain-like-I’m-five" breakdown of OPEC and wonders why it keeps oil prices high.
• Nick Fountain sets the stage: After World War II, American and European oil giants (“The Seven Sisters") controlled oil production and prices in oil-rich countries, not the oil states themselves.
• To reclaim power, oil-producing countries banded together.
• Wanda Jablonski, an influential oil journalist, emerges as a pivotal connector—dubbed “the midwife of OPEC” (10:10).
• The 1959 secret meeting: Oil ministers from Venezuela, Saudi Arabia, Kuwait, Iraq, Egypt, and Iran met discreetly under a tree on the Nile, aiming to “wrest control back” from foreign oil majors and set up OPEC.

"[Wanda] came to be known as the midwife of OPEC."
— Anna Robino (10:10)

Notable Moment

• The cloak-and-dagger founding of OPEC, complete with black suits and fears of industrial espionage, is recounted like a real-life spy thriller.

"It was a James Bond atmosphere."
— Anna Robino (09:25)

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2. How Did OPEC Start Controlling Oil Prices? (10:28 - 13:31)

• Initially OPEC was just an advisory group: “It was a grievance organization.” (10:59 – Nick Fountain)
• The watershed moment: 1973 Arab-Israeli War and subsequent oil embargo (by some OPEC members) triggers a global economic shock.
• Prices soar from $3 to $12 a barrel almost overnight, exposing OPEC’s potential to move markets.

"It was the biggest economic shock the world has ever seen..."
— Anna Robino (13:02)

• The lesson: OPEC’s real power is in collectively limiting oil supply.

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3. The Cartel Dynamics and Quotas (13:31 - 20:17)

• Guest: Ibrahim Almohana, decades-long Saudi oil advisor.

• OPEC formalizes production quotas in 1982 to coordinate supply and control prices.

• Cartel vs. Supply Management:
  Nick: “Is it a cartel?”
  Ibrahim: “No, no, come on. No, no, no, no. It is a management. You need it.” (17:09)

• Saudi Arabia’s unique role as “swing producer”—adjusting its own output to smooth global oil prices.

"Swinging producer, AKA the swing Producer. And this is really important..."
— Nick Fountain (17:44)

• Cheating and Free Riding: Member countries frequently exceed quotas, undermining OPEC’s power.

"Was that a big problem?"
"It was a major problem."
— (Nick Fountain and Ibrahim Almohana, 19:34–19:37)

• Example: In 1985, Saudi Arabia floods the market in retaliation, crashing prices to historic lows (as little as $0.19/gallon at the pump).

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4. OPEC’s Waning Power & The UAE’s Departure (20:25 - 26:05)

• Recent Developments:
  • US production surges, lessening OPEC’s grip.
  • Ongoing issues: quota cheating, internal rivalries, geopolitical conflict (notably, war in Iran, embargoes).
• UAE’s Exit:
  — Interview with OPEC watcher Kate Durian. — The “Green Paradox”: With a global move away from fossil fuels, producers like the UAE want to extract and sell as much oil as possible before demand dries up. — UAE has expanded its oil capacity and resented quotas capping its output. Diplomatic rifts with Saudi Arabia culminate in UAE’s public exit (23:31 – 25:50).

“We have higher capacity now. We want a higher production quota.”
— Kate Durian (24:24)

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5. Will the UAE’s Exit Lower Gas Prices? (25:50 - 27:01)

• Kate Durian's Verdict: Unlikely—for now. Emirati exports are currently constrained by Iran’s blockade of the Strait of Hormuz, not quotas.
• Even if the Strait reopens, it’ll take a long time to rebuild global oil inventories and meaningfully affect prices.

"The only way you're going to get gas prices to come down is if the Strait reopens, if everything returns to normal."
— Kate Durian (26:05)

• UAE’s potential extra production is only about 1.5% of global supply—not enough to crash prices.

"Prices will come off, but they're not going to come off to an extent that, you know that's going to make a huge difference."
— Kate Durian (26:30)

• The future depends on how OPEC reacts: Will they engage in a punishing price war or try to keep prices high by coordinating further?

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Memorable Quotes & Moments

• “That's like my whole job is to not know the answers to questions and then figure them out.”
  — Nick Fountain (01:04)
• "It was considered the bible of the oil industry."
  — Anna Robino, on Wanda Jablonski's newsletter (06:53)
• "Some OPEC countries were not really willing to find a joint solution."
  — Ibrahim Almohana (19:24)
• “Do Saudis look down on the cheaters and say, oh, yes, yes, yes.”
  — Nick Fountain (19:51)

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Timestamps for Key Segments

• [03:29] — The origins of OPEC (The Seven Sisters and secret meeting on the Nile)
• [09:25] — The “James Bond atmosphere” secret meeting
• [13:02] — The 1973 oil crisis and OPEC’s breakthrough
• [16:51] — Introduction of production quotas in 1982
• [17:44] — Saudi Arabia’s role as swing producer
• [19:24] — Free rider/cheating problem among OPEC members
• [20:17] — Saudi Arabia floods the market, oil price crash
• [23:31] — UAE and Saudi tensions, the Green Paradox
• [24:24] — UAE demands higher quota
• [25:50] — Will the UAE’s exit cut gas prices?
• [26:30] — Estimate of current oil shortage and why relief will be slow

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Conclusion

The episode provides a compelling history lesson, a behind-the-scenes look at international oil politics, and a clear answer for listeners: OPEC’s power has waxed and waned with time, shaped by the balance between collective action and self-interest. Recent events, like the UAE’s departure, reflect ongoing tensions and external pressures but are unlikely to have a dramatic immediate impact on gas prices. As always, the global oil game is as much about politics and personalities as it is about economics.

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Further Reading/Recommendations from the Show:

• Queen of the Oil Club (Anna Robino’s biography of Wanda Jablonski)
• Oil Leaders (Ibrahim Almohana)
• The Prize (Daniel Yergin)

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Transcript

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[Planet Money Host / NPR Announcer]

This is Planet Money from NPR.

[Nick Fountain]

We here at Planet Money are firm believers in the saying there's no such thing as as a dumb question. Because even the most simple questions can lead to incredibly intricate answers that reveal how the economy works. So we get especially excited when y' all come to us with questions that you feel like you should already know the answers to. Like the other day we got a question from a listener named Valerie Berecki, who at first didn't even want us mentioning her name.

[Listener Valerie Berecki]

Uh, I have a lot of friends that listen to npr, specifically Planet Money, and I think it's embarrassing when you don't know the answer to what should be a basic question every American should know.

[Nick Fountain]

In my opinion, that is not true at all. That's like my whole job is to not know the answers to questions and then figure them out.

[Listener Valerie Berecki]

I don't know.

[Nick Fountain]

Luckily, Valerie got over it. She told us she thought of her question while prepping for a camping trip. She has a diesel guzzling camper van and had a question related to how much it cost to fill up at the pump. So she whipped out her phone and started talking into it. Voice to text pressed send. And when her email landed in our inbox, it read, I, Planet Honey, I got a kick out of that.

[Listener Valerie Berecki]

That's not what I said. That's what voice to text said.

[Nick Fountain]

What did you say?

[Listener Valerie Berecki]

Hi, Planet Money. It would be so awesome if you guys could do an episode explaining OPEC to us like we're five years old.

[Nick Fountain]

I have an almost five year old who definitely has never heard of the Organization of the Petroleum Exporting Countries. Not sure she knows what gas is either. And Valerie's question gets more advanced real fast. She asked what OPEC does to make oil prices go up or down in general.

[Listener Valerie Berecki]

I understand they exist to keep supply low in order to keep prices higher. But I don't understand why, what, when, how. Why keep prices high?

[Nick Fountain]

Love it. All right, I am going to try to answer as many of those questions as possible. I will do my best.

[Listener Valerie Berecki]

Awesome.

[Nick Fountain]

Hello and welcome to Planet Money's maybe regularly occurring series. Everything you wanted to know about what is opec, but we're too afraid to ask. I'm Nick Fountain. Today on the show, we're going to track down the answers to Valerie's questions. What is opec? Why does it exist. How and why does it control oil prices? And why did the United Arab Emirates just leave opec?

[Listener Valerie Berecki]

You know what else I thought would be interesting to know?

[Nick Fountain]

What?

[Listener Valerie Berecki]

Can you actually expect to see gas prices fall at some point in time given the UAE departure?

[Nick Fountain]

All right, good luck on the camping trip. Thank you so much.

[Listener Valerie Berecki]

Thank you. Bye bye.

[Nick Fountain]

Bye.

[Planet Money Host / NPR Announcer]

Support for NPR and the following message come from Spectrum Business with connectivity solutions to help your business stay online and on track. Reliable connections, responsive support and tailored solutions. Spectrum.com business restrictions apply. Services not available in all areas.

[Nick Fountain]

New shows, new music, new movies. Keeping up with pop culture sometimes feels like a full time job. Thankfully, over at Pop Culture Happy Hour, it's literally our job. We break down what's actually worth watching, listening to and pretending you already knew about. So the next time someone says, did you see that? You can say, yeah, obviously. Follow NPR's Pop Culture Happy Hour where wherever you get your podcasts. All right, let's do this. Our first two questions, courtesy of listener Valerie what is OPEC and why does it exist? The simplest answer? It's a group of oil states that have huge sway over oil markets because they decide together how much to pump. But there is so much more, starting with a great story about why OPEC exists, which involves a secret meeting under a tree on the banks of the Nile. This meeting happened in 1959, and the reason it happened had to do with who controlled the oil market at the time, which was not the countries that had the most oil. You know, the Saudi Arabia and Venezuelas of the world. Who controlled the oil markets was the American and European companies that were drilling in those countries. And those companies, which included the likes of Gulf and Shell and Texaco, you might remember from our recent show about Venezuelan oil, had a pretty cool nickname, the Seven Sisters. So the Seven Sisters were the huge companies that were extracting oil from the oil states. And as the name implies, the Seven Sisters were awfully close. They were separate businesses, but. But they coordinated how they dealt with the oil states. They divvied up who got to drill and where. They even decided the price they would pay countries for their oil. And that is why OPEC was hatched essentially as a response to this kind of a cartel, because the countries whose oil was being pumped were like, why don't we have more control over the price of our oil? This is where the secret meeting comes in to set the stage. Picture, if you will. Cairo, 1959. The Hilton, which is this gleaming hotel covered in turquoise tiles. And at that hotel are guests of what was called the Arab Petroleum Congress. Basically a who's who of international oil executives and a bunch of oil ministers. Is it mostly men?

[Planet Money Host / NPR Announcer]

Oh, almost all men.

[Nick Fountain]

This is Anna Robino, who's a biographer. Okay, so into this.

[Planet Money Host / NPR Announcer]

Into this sea of men walks whom walks Wanda Jablonski, who is this petite blonde woman with big eyes, very elegant, very put together, and she knew basically everybody in the room. Wanda Jablonski was the most powerful woman in the international oil world for decades.

[Nick Fountain]

Rwanda died in 1992. Luckily for us, Anna, who worked for Wanda, ended up writing the book on her, and that's why we have this story.

[Planet Money Host / NPR Announcer]

I'm delighted that you're interested in Wanda.

[Nick Fountain]

Wanda was, among other things, an investigative journalist, a power broker, the publisher of a newsletter called Petroleum Intelligence Weekly. And when we say newsletter, we're not talking about one of those newfangled substacks.

[Planet Money Host / NPR Announcer]

It was considered the bible of the oil industry.

[Nick Fountain]

Bible of the oil industry.

[Planet Money Host / NPR Announcer]

The bible of the oil industry was printed on this very thin at the time called Bible paper so that it could be mailed air mail for the lowest cost, and so that it could be folded and fit into a man's suit jacket pocket. And she would go around to any meeting she had with oil folks and she would slip this into their jacket

[Nick Fountain]

pocket to hear Anna's telling of it. Wanda's reporting revealed the secretive ways the seven sisters were extracting wealth from the oil states like little accounting tricks.

[Planet Money Host / NPR Announcer]

This is where Wanda actually was so useful and helpful to many of these young sheikhs and leaders in learning about the economics of oil, learning about the secrets, the mysteries, actually, of how these seven sisters were running the show.

[Nick Fountain]

Which brings us back to the conference, the one where Wanda walked into the sea of men. Just before the conference, the seven sisters decided, meh, we're gonna start paying less for oil. And the oil ministers of the countries that produce that oil are just furious

[Planet Money Host / NPR Announcer]

because they've not been notified of this cut in the price of oil, which means their royalties are gonna go down. And frustrated with that and the fact they know, thanks to reading Juana Jablonski's articles, that they're really losing out on a lot of the profits that the oil companies are pocketing. They want to do something about it.

[Nick Fountain]

So that's the context going into this meeting. And Wanda, she knows all the players, including the two men maybe most amped to do something about this seven sisters sort of cartel. The oil minister of Venezuela and the oil minister of Saudi Arabia.

[Planet Money Host / NPR Announcer]

And she introduces the two of them and she said they would have met anyway. But she introduces the two of them and in the stories that she would tell, it would be either over. She'd say that it would be either over Coke or over whiskey, depending on her audience.

[Nick Fountain]

Coke, soda, not that other thing. The men arranged a secret meeting at an empty yacht club outside of town. They invited other officials from Kuwait, Iraq, Egypt, Iran. To avoid the prying eyes and ears of the Seven Sisters. They all drove in separate cars and met under a tree on the banks of the Nile.

[Planet Money Host / NPR Announcer]

It was a James Bond atmosphere.

[Nick Fountain]

A bunch of guys in black suits,

[Planet Money Host / NPR Announcer]

right, Meeting outside under a tree because they were so suspicious. They were so worried about being, you know, spied on.

[Nick Fountain]

It was right then and there that they came to an agreement. They were going to try to band together and wrest control back from the sort of cartel that was the Seven Sisters with an organization of their own, so that as an association of oil states, they could have more of a say over how much they sold their oil for. This organization would eventually come to be known as opec, the Organization of the Petroleum Exporting Countries.

[Planet Money Host / NPR Announcer]

And Wanda, she came to be known as the midwife of opec.

[Nick Fountain]

The midwife of opec. Yeah, a little dated, but we'll take it.

[Planet Money Host / NPR Announcer]

Or. Yes, another phrase that she was also called was OPEC's matchmaker.

[Nick Fountain]

So that is the what and why of OPEC, an organization of the biggest oil countries that got together in order to fight back against the Seven Sisters, this sort of cartel of oil companies. And at first the OPEC countries thought they would wield their power by negotiating kind of like collective bargaining for better contracts.

[Planet Money Host / NPR Announcer]

It was in effect more of a consultative body than it was an organization that had any impact on the price of oil.

[Nick Fountain]

It was a grievance organization.

[Planet Money Host / NPR Announcer]

Yeah, that's actually a good way of putting it. They did have grievances. They were trying to figure out a way to negotiate with the major oil companies. But the major oil companies wouldn't meet

[Nick Fountain]

with them or at least wouldn't give them what they wanted. The power was still with the oil companies and OPEC was kind of just an industry group. It would be more than a decade before OPEC countries would realize their power. Together they could control oil prices. Which gets us to our next question from listener Valerie. Why and how dangerous did OPEC start to control oil prices?

[Listener Valerie Berecki]

Why? What, when? How?

[Nick Fountain]

Why what? When? How did OPEC start to control oil prices? Well, it turns out there was kind of a breakout moment. It is an all out war. October 1973 when Egypt and Syria invaded

[Planet Money Host / NPR Announcer]

Israel, the surprise attacks came early this

[Nick Fountain]

morning, in the air and on the ground. Shortly after the war started, the US sent planeloads of arms and supplies to support Israel. And a bunch of the Arab oil producing countries did not like this. To show their disapproval, they did two things. One, they said, none of our oil is going to go to the supporters of Israel, especially the us. This became known as the Arab oil embargo. And this was not opec, by the way. It was a smaller group. But the second thing they did, and the more important was to limit the amount of oil they even pumped out of the ground. And that is because the US Wasn't only buying oil from this group of countries. So even with the embargo, they could get the global market rate for oil elsewhere. If these countries really wanted to put pressure on the US and these other countries, they needed to reduce the total amount of oil in circulation. So they said they were going to cut production 5% every month as long as the war continued.

[Planet Money Host / NPR Announcer]

It was the biggest economic shock the world has ever seen because the price of oil went from $3 a barrel to $12 a barrel almost overnight. And in the United States, we ended up with long gas lines.

[Nick Fountain]

How long have you been waiting in line?

[Planet Money Host / NPR Announcer]

About five minutes. I just cut in front of a whole bunch of people.

[Nick Fountain]

Did that guy behind you tell you that he cut into the line twice? I got out.

[Planet Money Host / NPR Announcer]

And you told talk to him.

[Nick Fountain]

And he's just so obnoxious. He's so blatant about it. You know, as we mentioned, the embargo and production cuts wasn't an OPEC policy. It was just some countries. But OPEC members learned a lesson from it. Their power was not in expressing their grievances or trying to negotiate. They could control the market by banding together and limiting supply. At this point, OPEC countries were producing more than half of the world's oil. So the answer to listener Valerie's question about why and how OPEC controls prices comes from that insight that their power lies in collectively controlling supply. But, and this is more evidence of how intricate the answers to simple questions can be, it turns out doing anything, anything collectively is very, very hard, especially when it has to do with money.

[Planet Money Host / NPR Announcer]

OPEC's power lies in acting together and actually sticking to what they're saying they're going to do. The thing that's very hard is doing that over a long period of time

[Nick Fountain]

to hear about that, about how hard it is to keep the gang together and control how much money they get. For their oil, we called up the ultimate OPEC insider, Ibrahim Almohana. How many OPEC meetings have you been to?

[Ibrahim Almohana]

Oh, so many, so many.

[Nick Fountain]

Hundreds.

[Ibrahim Almohana]

More than that.

[Nick Fountain]

Thousands.

[Ibrahim Almohana]

No, I doubt that. I doubt.

[Nick Fountain]

Ibreem's job for nearly four decades was advising Saudi Arabia's oil ministers. He's been called the Saudi Oil whisperer. And part of his work was to try to move the oil market out kinda on vibes by convincing oil traders and journalists to see the market the way he saw it or the way he wanted them to see it. So if you want the price to go up, what do you do? How do you message that?

[Ibrahim Almohana]

I am not going to tell you

[Nick Fountain]

if you want the price to go down. How do you say that?

[Ibrahim Almohana]

No, no, no, let's. No.

[Nick Fountain]

Ibrahim keeps his tricks close to the chest. But talking to him, I got a better understanding of why OPEC would want to control the price of oil. Which listener Valerie had asked, why keep prices high? Now, OPEC doesn't necessarily want to keep prices high. Too high. People might switch to more efficient cars or electric cars. What they want to do is maximize their profits. Of course, though they never really say this out loud, what they do say is that they want to manage supply, smooth the market. Ibrahim told me that oil, like many commodities, has these huge boom bust cycles where the price of oil rises, companies drill more, explore more and pump more, and then there's too much oil and the price plummets. And opec, according to Ibrahim, just wants to smooth this cycle out, make it less painful for producers and consumers. But of course they want to control the price too. That's the whole point of opec. And the tactic OPEC eventually figures out comes from the lesson of the Arab oil embargo. You can control prices by controlling supply. So that is what the OPEC countries started doing all together as a block. Production quotas.

[Ibrahim Almohana]

The quota introduced in 1982 and for all countries, they were quota.

[Nick Fountain]

And if this sounds like a cartel to you, colluding to set production quotas in order to control prices, I agree. Is it a cartel?

[Ibrahim Almohana]

No, no, come on. No, no, no, no. It is a management. You need it.

[Nick Fountain]

Ibrahim says they were trying to manage supply, not set the price. Each member country was selling their oil on the open market. But regardless, starting in the early 80s, every OPEC member agreed to a quota, a limit to the amount of oil they pumped out of the ground. Except Saudi Arabia.

[Ibrahim Almohana]

Saudi Arabia decided, I don't need quota. And they said, I will be the swinging producer.

[Nick Fountain]

Swinging producer, AKA the swing Producer. And this is really important. Having a swing producer, one member who's not strictly following quotas, is a way to finesse the smoothing OPEC was trying to do. Basically, if oil prices rise or drop, a swing producer can quickly ramp up or ramp down production to keep the oil price and market steady. And Saudi Arabia was the obvious candidate to be the swing producer because they have an ungodly amount of oil. You can just kind of tap the Saudi desert floor a few times and oil gushes out. So in 1983, they agreed to smooth oil prices for the OPEC countries by swinging their production, adjusting their output to keep prices steady. And that may seem like an enviable position because when prices get too high, you get to pump more and sell it at a nice price in order to bring prices down.

[Ibrahim Almohana]

And a good time, it's good. Bad time, it's really worse.

[Nick Fountain]

Yeah, bad times. Ibrahim says being the swing producer really is worse because when prices are down, you gotta pump less and you make less. So you're basically dealing with the boom and bust cycle all on your own. And then there was a bigger problem that Ibrahim says Saudi Arabia started to notice. As soon as the quotas were imposed, it became very tempting to skirt them. All those countries sitting there with that sweet, sweet or sour, sour crude ready to pump, selling it at that high price really looks tempting. What if we just pumped a little bit more than our quota? Who'd know?

[Ibrahim Almohana]

Some OPEC countries were not really willing to find a joint solution.

[Nick Fountain]

So they were cheating on their quotas?

[Ibrahim Almohana]

Yes, some of them, yes, they did.

[Nick Fountain]

Was that a big problem?

[Ibrahim Almohana]

It was a major problem.

[Nick Fountain]

OPEC didn't have a solid way to police countries on their quotas. And so countries would cheat. Often they're being essentially free riders.

[Ibrahim Almohana]

Absolutely. Some countries continue until today, all the

[Nick Fountain]

time, do Saudis look down on the cheaters and say, oh, yes, yes, yes. And all that cheating. It eventually ticked off Saudi Arabia so much that they decided in 1985 to show everyone who was boss and just flood the market with oil. And that crashed the price of oil everywhere. It got so low that in the spring of 1986, some gas stations were slinging gallons for pennies.

[Planet Money Host / NPR Announcer]

Cheap gas, real cheap gas. 19 cents is a heck of a lot cheaper than it usually is. That's right, 19 cents a gallon. The low price.

[Nick Fountain]

For a second there, OPEC was in disarray. But it did not die. OPEC rebuilt the quota system, added some members, regained their status as the most important player in the global oil market. But recently Their power has waned. Among other things, the US Is now producing a ton of oil, which means OPEC is a smaller player. And that plus the normal cartel dynamics of everyone cheating, plus the war in Iran has made keeping the gang all together harder than ever. And that is part of the answer to the last piece of our listener Valerie's question. Basically, what's up with the United Arab Emirates ditchin opec? We're gonna tackle that bit after the.

[Planet Money Host / NPR Announcer]

Support for npr. And the following message come from Spectrum Business with connectivity solutions to help your business stay online and on track. Reliable connections, responsive support and tailored solutions. Spectrum.com business restrictions apply. Services not available in all areas.

[Nick Fountain]

So the reason listener Valerie emailed us in the first place was of course because the United Arab Emirates, home to Dubai and Abu Dhabi, a bunch of oil wealth, recently decided to leave opec. They left at the beginning of the month. Why? And what will this mean for Valerie when she's at the pump trying to fill up her diesel camper van? For more on that, we called up legendary OPEC watcher Kate Durian. Kate lived in the UAE for almost two decades, went to nearly every OPEC meeting for even longer. She even brought her son along.

[Kate Durian]

To some, I think they had a sort of junior OPEC reporter badge made for him.

[Nick Fountain]

Apparently her son picked up the trade pretty quickly. One time he, he yelled at the Saudi oil minister, are you going to

[Kate Durian]

change the price of oil? And everybody laughed. You know, it's like nobody would dare ask the minister that question.

[Nick Fountain]

Little guy had a lot to learn. OPEC isn't a cartel, it's just a supply management organization. The Saudi oil minister doesn't control the price of oil. He just. Anyways, wrong question. The question at hand, why did the UAE leave opec? Kate says the UAE is an interesting case. Recently they've been grappling with this problem that honestly, all oil producing nations have to confront. It's called the Green Paradox, which is, as the globe decarbonizes, the incentive for oil producers is to pump more, pump as much as possible so they can get as much money for their oil right now before demand collapses. So the uae, along with trying to diversify their economy by becoming a financial hub and investing in data centers and aviation, has been wanting to increase their production. But OPEC has been holding them back, saying, no, stick to your quota. What was the first sign that you saw that the UAE might not be happy with this situationship?

[Kate Durian]

Well, you know when you cover the Middle east, and I've been doing it for God, decades You have to read tea leaves. You know, you've got to look at the little nuances because they don't come out and say it right.

[Nick Fountain]

Kate says she's seen tensions for years in those tea leaves. Like the Saudi Crown Prince and the Abu Dhabi Crown Prince stopped going out of their way to say nice things about each other. And maybe more importantly, the Emiratis started complaining more and more about their quota, which wasn't increasing, even though they'd made all these investments in their oil fields and vastly increased their production capacity. They were basically saying, we've grown up. Stop treating us like the little brother. Kate says things really came to a Head in 2021. She was covering the OPEC meeting. Saudi Arabia proposed modest increases to quotas, but based on old production capacities.

[Kate Durian]

And the Emirati said, no, we're not taking this because you're using a baseline from back in 2018, when our Capac was much lower. We have higher capacity now. We want a higher production quota. And so they scuttled the agreement, and

[Nick Fountain]

it became public in a really serious way. The oil ministers did dueling TV appearances.

[Kate Durian]

And Kate was thinking, hang on, this is very unusual. These. These. These countries don't normally argue in public. They try to do it behind closed doors.

[Nick Fountain]

The stalemate lasted weeks, and it got nasty. Saudi Arabia even banned flights from the uae. Eventually, everyone figured out a way to save face. The UAE got higher quotas. But to keen tea leaf readers like Kate, it was clear the UAE wanted out. And after the US and Israel started a war with Iran and Iran, a fellow OPEC member started bombing the uae. That's when they finally said, see you later. The UAE left opec. That thing we told you about how hard it is to keep a cartel together, we're seeing it happen in real time now. What does that mean for Valerie's summer camping budget? The whole reason we're doing this episode is because we got a question from a listener, Valerie, who asked us, can we expect to see gas prices fall at some point given the UAE's departure? Do you have an answer to that?

[Kate Durian]

No. I mean, how much more can they produce?

[Nick Fountain]

This is the thing. Iran's blocking of the Strait of Hormuz has prevented a large portion of Emirati oil from even leaving the country. So Kate says the UAE leaving OPEC isn't going to have much of an effect right now.

[Kate Durian]

The only way you're going to get gas prices to come down is if the Strait reopens, if everything returns to normal.

[Nick Fountain]

Oh, sure. But after the Strait opens, after the

[Kate Durian]

strait opens, you know what's going to happen? Your stocks. You have to rebuild stocks and people are going to be rebuilding stocks.

[Nick Fountain]

Countries will refill their strategic reserves. Companies will refill their tanks, their tankers, their refineries. But it's going to take a long time to get back to normal.

[Kate Durian]

You know how much we've lost so far? We've lost 700 million barrels at a loss of 10 million barrels a day. If you multiply it, we're going to get to a billion. I mean, that's a billion barrels. It's going to be, it's going to take a while for all these tankers to be taken out to sort of get to their destinations. It's really not going to happen overnight. Prices will come off, but they're not going to come off to an extent that, you know that's going to make a huge difference.

[Nick Fountain]

In short, Kate doesn't think there's any major relief coming anytime soon. And even after things do get back to normal and the UAE gets to sell as much oil as it wants, no quotas, it'll only add about 1 1/2% to the world's overall oil supply. So, listener Valerie will prices at the pump go down? Kind of depends on how OPEC responds. Do they want a punishing price war with the UAE or do they want to keep the price high? Collectively, they're going to have to decide. You know how Wanda Jablonski had the Go to newsletter for for oil for decades. Now our friends over at the Indicator have launched the Go to newsletter for fun economic insights of the 2000s. It's not on Bible paper. You can't tuck it into a suit pocket. But you can find it in your email inbox if you [e-mail] indicator newsletter. You won't regret it. If you have a question about how the world works, even if you're embarrassed you have it, please send it to us.

[Ibrahim Almohana]

Us.

[Nick Fountain]

Our email is planetmoneypr.org this episode of Planet Money was produced by James Sneed with help from Willa Rubin. It was edited by Marianne McCune, fact checked by Sierra Juarez and engineered by Robert Rodriguez. Alex Goldmark is our executive producer. Few book recommendations. Anna's book about Wanda is called Queen of the Oil Club. Ibrahim has a book where he reveals more secrets than he would tell us. It's called Oil Leaders. And the greatest book ever on oil is Daniel Jurgen's the Prize. I couldn't have done this show without it. I'm Nick Fountain. This is NPR thanks for listening, and thank you for asking. Valerie.

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