The United Arab Emirates has announced its departure from the Opec oil cartel after 60 years of membership, dealing a heavy blow to the group and its de facto leader, Saudi Arabia. The exit, effective from 1 May, comes as global energy markets face the biggest supply crisis in history, with the US-Israeli war on Iran blocking a fifth of the world’s seaborne oil through the Strait of Hormuz.
The UAE, Opec’s third-largest oil producer, said leaving the organisation 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 Donald Trump, who has accused Opec of “ripping off the rest of the world” by inflating oil prices. Last week Trump confirmed US talks with the UAE on a financial lifeline involving central bank currency swaps.
The departure lays bare long-running tensions between the UAE and Saudi Arabia over production limits and geopolitics. Saudi ministers favoured curbs to buoy oil prices after three consecutive years of losses, while the UAE grew frustrated with limits and is expected to pump more oil to fund its low-carbon plans. Opec members control about 80% of global proven oil reserves but produce only 40% of crude to support petrostate economies.
Analysts said the UAE withdrawal significantly weakens Opec, as it is one of the few members with meaningful spare capacity. Jorge León of Rystad Energy noted that while near-term effects may be muted due to ongoing Strait of Hormuz disruptions, the longer-term implication is a structurally weaker Opec. The UAE has a capacity of about 4.8m barrels per day and significant room to increase output, positioning it well to pursue a strategy beyond cartel limits.
The global oil price has reached as high as $119.50 a barrel since the war in Iran, and rose 3% to about $111 on Tuesday. The UAE said it would bring additional production gradually, aligned with demand and market conditions. David Oxley of Capital Economics said the surprise announcement will not have immediate implications for the global energy market, but the shift to low-carbon energy likely influenced the exit, as producers able to pump more crude may abandon limits to monetise reserves before fossil fuel demand declines.
