The United Arab Emirates has announced it will leave the Opec group of oil producers on 1 May, a move that deals a significant blow to the cartel and its de facto leader, Saudi Arabia. The decision comes amid the global energy shock caused by the Iran war and could allow the UAE to increase its oil and gas output in the future.
The UAE’s energy ministry stated that the exit reflects the country’s long-term strategic and economic vision and its evolving energy profile, following a comprehensive review of production policy and capacity. The UAE, a member since 1967, has long chafed at Opec production quotas it considered too restrictive.
The announcement adds to the disarray within Opec, whose Gulf members are already struggling to export crude through the Strait of Hormuz, a narrow chokepoint between Iran and Oman. Iranian threats and attacks on vessels have disrupted normal shipping, with a fifth of global crude and LNG normally passing through the strait. The ministry said the constraints mean the decision will not have an immediate large effect on markets.
Analysts predict the UAE’s departure could weaken Opec and lead to higher production by the UAE once the disruption from the Iran war ends. The move also reflects increasingly frosty relations between the UAE and Saudi Arabia over political and economic matters in the Middle East, exacerbated by attacks from fellow Opec member Iran during the conflict.
