The United Arab Emirates' decision to pull out of Opec was a surprise, but it did not come out of the blue. The UAE has long complained about the tightness of its Opec production quotas. However, the timing of its announcement suggests the decision was more driven by its hard line against Iran and its frustration with the more conciliatory stance of other Gulf Arab states led by Saudi Arabia. This may have post-war costs for the UAE, writes Tom Holland. Also, Tom Miller examines the position of Pakistan after the UAE called in a US$3.5bn loan to Islamabad, and Yanmei Xie looks at Spain's open-door policy for Chinese inward investment.

A number of clients have asked about the extraordinary backwardation of the oil market, which has seen the price of long-dated futures remain relatively anchored even as prices at the extreme short end of the curve have surged. "Doesn’t this backwardation mean that market participants are confident the Iran war is effectively over?" Unfortunately, the answer is “No, not really.” Tom explains why.

It can have surprised no one that the weekend’s talks between the US and Iran in Islamabad broke down with no agreement. The two sides were miles apart going into the meeting, and in 20 hours of negotiations, neither appeared to budge to any significant degree. But Donald Trump’s response, declaring a total blockade on the Strait of Hormuz, was more unexpected. Tom examines if it is likely to be effective.