Why the U.A.E. Is Breaking Up With OPEC

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0:33Alex Ossola:The UAE is leaving OPEC. We'll get into what that means for the oil cartel and the oil market. Plus, why a bill intended to create homes has led to an existential crisis for developers that build homes to rent them. A lot of build-to-rent firms are contemplating the idea that if the Senate bill passes as is, this new growing sector of the rental market could go extinct, essentially. And the Justice Department charges former FBI Director James Comey for a second time. It's Tuesday, April 28th. I'm Alex Oseleff for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

1:16Alex Ossola:The United Arab Emirates said today that it would leave OPEC. It's a heavy blow to the oil cartel. The UAE is OPEC's third biggest producer. And according to figures by the International Energy Agency, its exit takes away 13 percent of OPEC's production capacity. For more, I'm joined now by WSJ foreign correspondent Georgi Kanchyev. Georgi, why is the UAE doing this and why now when the war with Iran has hurt a lot of energy infrastructure in the region? One of the reasons is that they have a very ambitious investment program. They want to kind of increase their oil production capacity in the future.

1:52And being in OPEC, it functions as a straitjacket. Right now, they're supposed to be producing around 3.4 million barrels a day. Of course, right now, they're producing far less because of the crisis, but they want to increase that by up to 5 million. They want to be able to produce freely outside of the cartel. Another reason is that they've had kind of a rift with Saudi Arabia, which is the dominant producer in OPEC. For a number of years. And all of that, now we have the Iran war, of course, reshuffling the alliances of the region. To some extent, they're looking beyond the current war. The UAE seems to be making this calculated decision that longer term, they can increase output by a lot.

2:35Alex Ossola:This move also comes at a time when the U.S.'s rise as an energy exporter has kind of diminished OPEC's influence on energy markets. Where does the UAE's departure leave OPEC? this decision by the UAE to leave. It's a big blow to OPEC because ultimately this is the third biggest producer. Also important here is that the UAE and Saudi Arabia, these are the only two countries that actually have spare capacity, meaning that they can ramp up production quickly. All the other countries are producing kind of close to their potential limit, which means that in another situation of supply shock, they can increase production quickly.

3:13That is being obviously taken out now with UAE leaving from May 1st, which is just in a few days. And that obviously decreases the flexibility of OPEC to manage the market, which they have done for decades.

3:26Alex Ossola:Looking at oil prices today, they don't seem super affected by the announcement. But what about in the future? How could the UAE's departure from OPEC affect energy markets? Right now, there is really not much of an impact precisely because all the countries in the Gulf are constricted by the Strait of Hormuz. But in the longer run, if the UAE increases its production, that would potentially add more oil to the market, which means prices could go down. That was WSJ foreign correspondent Georgi Kanchov. The Justice Department has secured a new indictment against former FBI Director James Comey, a prominent critic of President Trump.

4:05Alex Ossola:Prosecutors charged Comey with threatening Trump based on a photo Comey posted on social media last year. In the photo, seashells were arranged in the numbers 86-47. Trump officials at the time said it was a threat to encourage killing Trump, as 86 is old times slang for get rid of, and Trump is the 47th president. Comey said then that it didn't occur to him that the post would be read as a threat. He and lawyers representing him didn't immediately respond to requests for comment. The case is the Justice Department's second attempt to prosecute Comey. He was charged in September with lying to Congress, but a judge dismissed that case.

4:40Alex Ossola:Federal Communications Commission Chairman Brendan Carr is launching an early review of Disney's broadcast television licenses. Disney owns eight ABC TV outlets. The review of the licenses comes a day after President Trump called for ABC late-night host Jimmy Kimmel to be fired. The review is an outgrowth of an earlier FCC probe into Disney's DEI initiatives. A person familiar with the FCC's plans says that the review coming so soon after Kimmel's fight with the administration is a coincidence. Disney says that the record demonstrates that it's qualified to hold the licenses. In earnings, General Motors beat Wall Street estimates for profitability in the first quarter and raised its guidance for the year.

5:22Alex Ossola:Helping boost its bottom line were lower costs from its pullback in electric vehicles, along with an expected$500 million tariff refund. So far, GM says consumers still want its larger trucks and SUVs, despite higher oil prices. But CEO Mary Barra says the automaker's vehicle lineup can handle changes in consumer preferences. We're well prepared with a portfolio. I'd stand against anyone when we look at how consumer behavior might shift, depending on how long the war left. But we just don't know. And in other auto news, Chinese automakers have been trying to break into the U.S. for years. More than 70 Democratic representatives sent a letter to President Trump today to keep the pressure on China.

6:04Alex Ossola:They say any effort to lower barriers for Chinese cars is a threat to U.S. manufacturing, workers, and national security. Ryan Felton covers the automotive industry for the journal and joins me now. Ryan, China's car makers have been largely kept out of the U.S. because of tariffs on vehicle imports and a ban on Chinese connected vehicle software. So why are lawmakers and U.S. companies worried that might change? The biggest thing right now is the summit is coming over the next few weeks. The meeting in May between President Trump and Chinese leader Xi Jinping, right? Yes. This upcoming meeting, you know, could have some stakes for China's automakers.

6:42That's what's pushing some of these lawmakers.

6:45Alex Ossola:Where does President Trump stand on this issue right now? There isn't the most consistent messaging from President Trump on this. A few months ago, he came to Detroit for a speech. And this remark basically was him saying, I would welcome any Chinese automakers to come here and build in the United States. He's also made a lot of pointed remarks about the Chinese auto industry and what it's done elsewhere. He said in an interview that the 100 % tariff applied to Chinese EVs was the one good thing he thinks Joe Biden did. So there's some conflict in those two points. Would he welcome them still to build here?

7:27Or is he coming around to the idea that they should be kept out at all costs?

7:33Alex Ossola:Part of what's driving the letter from lawmakers today is that U.S. automakers are very concerned about China and Chinese carmakers. Why is that? What is the threat to the domestic industry? China's carmakers are able to sell vehicles at very aggressive, low prices. and the vehicles they're selling are packed with a lot of cool new technology. The main concern is domestic car makers as of now can't compete. And that reality is what's led automakers to say it's an existential threat to the industry here. That was WSJ reporter Ryan Felton. Thanks so much, Ryan. Thanks for having me.

8:16Alex Ossola:Stocks linked to the AI boom dropped today after, as you heard on this morning's show, OpenAI has missed internal revenue and user targets. That meant declines in NVIDIA, Oracle, and CoreWeave. The Nasdaq led losses in the three major indexes today and closed down 0.9%. Meanwhile, oil prices gained after an Iranian proposal to reopen the Strait of Hormuz was met with skepticism from President Trump. And gas prices in the U.S. have reached another wartime high. According to AAA, the average price is now$4.18 a gallon. Coming up, King Charles is in Washington, playing up transatlantic ties during a stringed moment in the special relationship.

8:57Alex Ossola:That's after the break.

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9:36Alex Ossola:The Trump administration and Congress have been trying to tackle the issue of home affordability this year. One measure, a Senate housing bill, was meant to create new housing. But even though the bill isn't law yet, it's already having a chilling effect on one part of the real estate market, the build-to-rent industry. Housing policy lobby groups say that developers have put at least 10 ,000 new housing units on hold, likely a sliver of the impact across the industry. WSJ housing reporter Rebecca Picciotto says developers are reacting to a provision inside the bill. So the Senate passed this landmark housing bill and touted it as something that was going to make it easier and faster to produce new housing.

10:18But there was one small provision that would require build-to-rent firms to sell any of their newly constructed homes within seven years of building them. Developers of these bill-to-rent projects say that these are assets that they see as long-term investments that they want to generate profit off of for many, many years to come. This idea that within seven years you'd have to sell your entire portfolio off has frozen the pipeline for financing for new investment. So as a result, a lot of bill-to-rent firms are contemplating the idea that if the Senate bill passes as is, this new growing sector of the rental market could go extinct, essentially.

11:02Rebecca says that it's not clear what will happen with the legislation. The prospect that this one provision could threaten the life of the entire Senate bill, I don't think anyone wants that, especially given the midterm elections coming up. Everyone wants a housing win to campaign on. So there's a sense that a deal will get worked out, but things are very much still kind of in a deadlock.

11:25Alex Ossola:Meanwhile, the ultra-luxury housing market is reaching new heights. A Los Angeles estate with ties to Qatari Royals is hitting the market for$400 million. The 70 ,000-square-foot property is the most expensive home listed for sale in the U.S. and could propel the uber-luxury housing market. Whether you're looking to spend$400 million or$400 ,000 on a home, we want to hear from you. Are worries about mortgage rates, inflation, or the economy affecting your search? And what are prices like where you live? Send a voice memo to wnpod at wsj.com or leave a voicemail with your name and location at 212-416-4328.

12:06Alex Ossola:We might use it on the show. Britain's King Charles is in Washington. After a military ceremony today with President Trump, during which the president praised the friendship between the U.S. and U.K., Charles addressed a joint session of Congress. During his speech, Charles alluded to tensions between the U.K. and its former colony and urged the two nations to continue to work together. Ours is a partnership born out of dispute, but no less strong for it. so perhaps in this example we can discern that our nations are in fact instinctively like-minded a product of the common democratic legal and social traditions in which our governance is rooted to this day drawing on these values and traditions time and again our two countries have always found ways to come together And by Jove, Mr.

13:05Speaker, when we have found that way to agree, what great change is brought about, not just for the benefit of our peoples, but of all peoples.

13:16Alex Ossola:On the war in the Middle East, Iranian hackers have targeted hundreds of U.S. service members and officials in recent cyber attacks. Handala hack team, which is linked to the Iranian government, today claim to have published the names and other personal details of more than 2 ,000 Marines stationed in the Persian Gulf region. The Pentagon is investigating, but early indications suggest that at least some of the leaked information is authentic. And that's what's news for this Tuesday afternoon. Today's show is produced by Anthony Bansi, Danny Lewis, and Alyssa Luckpat, with supervising producer Tali Arbel.

13:49Alex Ossola:I'm Alex Osula for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

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