The United Arab Emirates has announced its withdrawal from the Opec oil cartel after 60 years of membership, dealing a significant blow to the group and its de facto leader, Saudi Arabia. The decision comes amid the biggest supply crisis in history, with global energy markets already strained by the US-Israeli war on Iran and the blockade of the Strait of Hormuz.
The UAE, Opec's third-largest oil producer, said leaving the cartel would give it greater flexibility to respond to a 'new energy age' in line with its long-term strategic vision. The move is seen as a win for US President Donald Trump, who has previously accused Opec of 'ripping off the rest of the world' by inflating oil prices through production cuts.
The exit lays bare long-running tensions between the UAE and Saudi Arabia over production limits and geopolitics. Saudi ministers have favoured curbs to support oil prices, but the UAE grew frustrated with restrictions and is expected to boost output to fund its low-carbon transition. The UAE has capacity to produce about 4.8 million barrels per day and significant room to increase output.
Analysts say the withdrawal weakens Opec structurally, as the UAE was one of the few members with meaningful spare capacity to influence markets. While near-term effects may be muted due to ongoing disruptions in the Strait of Hormuz, the longer-term implication is a less powerful cartel. The global oil price has reached as high as $119.50 a barrel since the outbreak of the war in Iran, rising 3% to about $111 on Tuesday.
The UAE joined Opec in 1967 through the Emirate of Abu Dhabi and remained a member after the UAE was formed in 1971. Its departure reduces Opec's membership to 12 countries, which control about 80% of the world's proven oil reserves but produce only 40% of global crude. The shift to low-carbon energy is also likely to have influenced the UAE's decision, as producers able to pump more crude and tolerate lower prices seek to monetise reserves before fossil fuel demand declines.
