OPEC+ will meet Thursday amid the war in Ukraine and associated sanctions, which have sharply reduced Russian crude oil and petroleum products exports. But the meeting of the oil cartel and its allies will likely only result in a continuation of monthly 400,000 barrels per day quota increases, less than half of which is matched to countries that actually have unused capacity. That outcome is a sharp departure from a bedrock assumption underpinning the U.S. relationships with Saudi Arabia and the United Arab Emirates—that they would use available spare capacity to help offset volume losses elsewhere when the world oil market faced a genuine crisis, as it does now. Saudi Arabia and the U.A.E. have chosen to severely weaken their ties with Washington. They are explicitly linking a threat to withhold production increases to demands for U.S. policy changes on other issues in the Middle East. In the process they are driving a wave of inflation in the U.S. and elsewhere. In their dealings with the U.S., Saudis in particular have often suggested that their maintenance of spare capacity provides a global public good. They have brought that capacity to bear to calm the market even when they disagreed with the U.S. on policy, such as increasing supply markedly in early 2003 as the U.S. prepared to topple Saddam Hussein. Not so now. A statement on March 9 by Yousef Al Otaiba, the Emirati ambassador to the U.S., initially hinted at an accelerated production increase and led to a sharp market correction. That position quickly changed. The two governments signaled via apparently authorized leaks in a number of prominent media outlets and op-eds by pro-Saudi commentators that both Saudi Arabia and the U.A.E. want to use the current oil shortage to force the U.S. to make a slew of policy concessions. Their demands include greater U.S. military and intelligence support for their war in Yemen, for President Biden to back off his goal of negotiating a restoration of the 2015 nuclear deal with Iran, and for the president to deal directly with Crown Prince Mohammad bin Salman. In particular, the two governments are demanding U.S. restore its designation of the Houthi movement as a terrorist organization. The Houthis have fought against Saudi Arabia and the U.A.E. in their war in Yemen. The Trump administration added the Houthis to the terror list, but Biden lifted the designation in 2021 and has been unwilling to reinstate it in part due to concerns that it would impede humanitarian aid to assuage the famine in parts of Yemen. While pro-Saudi and U.A.E. sources have said that the Biden administration seems to be preparing to make concessions in the face of high oil prices, it is unlikely the administration will cave, except perhaps on the symbolic matter of Biden dealing directly with MBS, as the crown prince is known. Biden has not spoken directly to MBS since taking office. It is telling that the sourcing on the press coverage suggesting that the U.S. will make concessions appears to be from people on the Saudi/U.A.E. side, with no senior U.S. officials confirming any of this narrative. It also is telling that Secretary of State Antony Blinken is visiting only two Arab countries on his current trip abroad, Morocco and Algeria, after it was widely reported in early March that he was considering visits to Saudi Arabia and the UAE. NN: OPEC+ is in a dream world. They will not raise output. $100+ is a dream deal for them…