Black gold

Key Takeaways

The UAE just left OPEC. But, to understand why this exit is historic, we need to go back to the very beginning of the oil power game. This is Monify's Orbit, and this week we're talking about gold. Before OPEC existed, oil was controlled by a small group of Western petroleum giants like BP and Shell. They controlled exploration, production, refining, and most importantly, pricing. They were known as the seven sisters. And for oil-producing nations, especially in the Middle East, that meant limited control over their own resources. So, in 1960, something big happened. Iraq, Kuwait, Iran, Saudi, and Venezuela joined forces to take back control. These five countries created a new organization, OPEC, the Organization of the Petroleum Exporting Countries. Their mission was simple: reclaim all control from the oil giants. Then, just a few years later, the UAE joined in 1967 and has over time become one of the largest producers in the group. For years, OPEC worked. But, the moment they showed their real power came in 1973. Its Arab members imposed an embargo on Western nations. Oil prices surged, and the world realized just how powerful coordinated supply could be. Then, came the disruption. The US changed the game with its shale revolution. New technologies like fracking and horizontal drilling allowed America to produce massive amounts of oil. The US went from a major importer to the world's largest producer. And suddenly, OPEC wasn't the only force controlling supply anymore. And now, the group is probably facing its biggest challenge in decades. So, how does the UAE's exit affect your money? This is not financial advice. Some of you might be thinking of actually trading oil. It's not for beginners. And while oil ETFs like USO exist, this market is extremely volatile and dominated by professionals. Second, keep an eye on the Strait of Hormuz. Right now, shipping routes matter more than production decisions. If oil can't move, the upside will be limited. And third, look at the producers, not just prices. When routes are reopened, companies with spare capacity like UAE's ADNOC are well positioned to benefit. This wasn't just an exit. It was a signal. The question is, who's paying attention? Catch you next week.