AMID the growing global energy and economic crisis occasioned by the Middle East war, the United Arab Emirates (UAE), on Tuesday, April 28, said it was quitting international oil producers group, Organisation of the Petroleum Exporting Countries (OPEC), dealing a blow to the cartel.
The exit of the UAE, one of the group’s biggest producers, weakens OPEC’s control over global oil supplies and widens a rift between the UAE and its neighbour, Saudi Arabia, effectively the leader of the group.
According to Reuters, the exit could also free the UAE to increase output once exports via the Gulf resume, as it would no longer be governed by OPEC quotas.
In his first public comments since the announcement, UAE Energy Minister, Suhail Mohamed al-Mazrouei, told Reuters in a telephone interview that the decision was taken after examining the country’s energy strategies.
He said the UAE had not discussed the issue with any other country, adding: “This is a policy decision, it has been done after a careful look at current and future policies related to level of production.”
Mazrouei said the world would demand more energy, implying the UAE would be positioned to meet that need.
Oil prices on international markets trimmed gains on Tuesday, following the UAE’s announcement it would on May 1 leave OPEC and OPEC+, which brings together OPEC and allied producers.
Mazrouei said he did not expect much immediate market impact from the news because of constraints in the Strait of Hormuz.
OPEC Gulf producers have been struggling to ship exports through the Strait of Hormus, a chokepoint between Iran and Oman through which a fifth of the world’s crude oil and liquefied natural gas normally passes, because of Iranian threats and attacks against vessels.
As Gulf supplies have become stuck, the International Energy Agency (IEA) said OPEC+’s share of global oil output fell to 44 per cent in March from about 48 per cent in February.
It is likely to fall further as production shut-ins become more pronounced, and then further in May as the fourth biggest producer leaves the group.
The UAE’s exit represents a win for United States (US) President, Donald Trump, who in a 2018 address to the United Nations (UN) General Assembly accused the organisation of “ripping off the rest of the world” by inflating oil prices.
Trump has also linked US military support for the Gulf with oil prices, saying that while the US defends OPEC members, they “exploit this by imposing high oil prices.”
The UAE is a regional business and financial hub and one of Washington’s most important allies. It has pursued an assertive foreign policy and carved its own sphere of influence across the Middle East and Africa.
Coming especially after attack during the Iran war, the UAE has strengthened its relationships with the US and Israel, with which it opened ties in the 2020 Abraham Accords.
It views the relationship with Israel as a lever for regional influence and a unique channel to Washington.
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