A key U.S. ally is now threatening the dollar's grip on oil, which is bad news for Washington's financial leverage.

• The United Arab Emirates, a founding OPEC member since 1967, is leaving the oil cartel and warning it may start pricing oil in yuan instead of dollars.
• The threat came after the Iran war, with the UAE signaling it could also start selling off its U.S. assets if it runs short on dollars.
• The U.S. responded by offering cheap dollar swap lines to keep the Gulf states from dumping their holdings.
• The Gulf states together hold over $2 trillion in U.S. assets, enough that selling it off could shake U.S. markets, which is why Washington moved fast to calm things down.

Outlook: Expect the U.S. to keep making concessions to Gulf oil states to protect the dollar's role in oil trade, while cracks in that system slowly widen.