Tag Archives: United Arab Emirates (U.A.E.)

This Might Save America Money In The Long Run

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On Tuesday, Legal Insurrection posted an article about a Trump administration proposal to rebuild energy sites in the Middle East. I hate to add to government spending, but this might pay off in the long run by lowering energy prices and keeping them there. As I write this, crude oil prices are about $90 a barrel because of the war in Iran. I have a feeling that war will end in the near future. If the war ends in a way that secures peace in the area, investment in the energy sites that were destroyed in the war would probably be a good idea.

The article quotes The Wall Street Journal:

Under Trump’s plan, the U.S. would seek a matching contribution from eight Middle Eastern partners—Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Kuwait, Oman, Iraq and Jordan—with the goal of generating a $10 billion investment fund. The investment would be called the Partnership for Allied Trust and Construction, or Pact.

Discussions on the fund are under way, and the terms of the arrangement could change, U.S. officials said. It is unclear when, or even if, other countries will sign on.

Some Middle East officials said the initiative appeared to be Washington’s attempt to cast the Strait of Hormuz as a less consequential energy route and show the U.S. and its allies as united in confronting Iran. They added that creating a fund to rebuild destroyed energy sites without a peace deal with Tehran would be premature, as the regime could target fresh infrastructure with drones and missiles.

Iran has been attacking oil refineries, gas facilities, oil fields, nuclear plants, and ports since February. Before we start rebuilding, we need to make sure that there will be no further attacks. If that condition is met, this is probably a good idea.

A Quick Look At The Moving Parts

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As I write this on Thursday morning, crude oil futures are roughly $90 a barrel and trending lower. According to AI, Russia needs oil at $100 a barrel to continue the war in Ukraine. My earlier research said $80 a barrel, but evidently $100 a barrel is needed to cover some accumulated debt that Russia has taken on because of the war.

Saudi Arabia is limiting America’s use of the Prince Sultan Airbase southeast of Riyadh and is not allowing American planes to fly through Saudi airspace to support the efforts to escort ships through the Strait of Hormuz. One guess as to why Saudi Arabia is doing this is that the Saudi’s don’t want to attacked by Iranian missiles or drones. They do not want to be collateral damage in the war in Iran.

The United Arab Emirates (U.A.E.) has left The Organization of the Petroleum Exporting Countries (OPEC) (and OPEC’s limits on U.A.E. oil production) and has an oil pipeline that avoids the Strait of Hormuz. Look for an increased use of that pipeline.

One of the current leaders of Iran has met recently with China’s Foreign Minister Wang Yi (days before President Trump is scheduled to meet with Chinese Communist leader Xi Jinping). China does not want Iran destroyed or the current government of Iran overthrown. China has major investments in Iran. Is China putting pressure on Iran to make a deal? If Iran agrees to give up their nuclear program and enriched uranium, can we trust them to do it?

Aren’t you glad that you are not President Trump who has to sort all this out?