The United Arab Emirates announced Tuesday that it will leave the Organization of the Petroleum Exporting Countries (OPEC) on May 1, dealing a significant blow to the oil cartel by removing one of its largest producers and diminishing its ability to dictate global oil supplies and prices.
Background of the Departure
Rumors of the UAE’s exit had been circulating for some time after it pushed back against OPEC production quotas it deemed too restrictive. The nation sought to sell more oil than OPEC was willing to permit. Capital Economics noted in an analysis, “Having invested heavily in expanding energy production capacity in recent years, the bigger picture is that the UAE has been itching to pump more oil.” The firm added that “the ties binding OPEC members together have loosened,” especially after Qatar withdrew from the cartel in 2019.
Middle East Political Dynamics
The move comes amid cooling relations between the UAE and Saudi Arabia, OPEC’s largest producer, over political and economic issues in the Middle East. Both countries were recently attacked by fellow OPEC member Iran during the war there, but that did not improve ties. The conflict has hampered OPEC’s ability to influence oil prices. Brent crude traded above $111 a barrel, more than 50% higher than its pre-war price. Iran’s closure of the Strait of Hormuz, a waterway through which one-fifth of the world’s oil supply travels—including the UAE’s—has sent oil prices soaring.
Impact on OPEC and Global Markets
Increased American oil production has also eroded OPEC’s influence in recent years. U.S. President Donald Trump has long criticized the cartel, accusing it of “ripping off the rest of the world.” The UAE’s departure is viewed as a victory for Trump. The UAE first joined OPEC in 1967 through the emirate of Abu Dhabi and later as a country in 1971. It produced around 3.4 million barrels of crude per day before the U.S. and Israel launched a war on Iran in late February. It also announced it would leave the broader OPEC+ group, which includes Russia.
Expert Analysis
Experts warn that OPEC’s loss will significantly weaken its ability to stabilize prices. Jorge Leon, head of geopolitical analysis at Rystad Energy, stated, “A structurally weaker OPEC, with less spare capacity concentrated within the group, will find it increasingly difficult to calibrate supply and stabilize prices. Losing a member with 4.8 million barrels per day of capacity, and the ambition to produce more, takes a real tool out of the group’s hands.”
Tensions with Saudi Arabia
The UAE-Saudi relationship has deteriorated in recent years. The two countries fought Yemen’s Iran-backed Houthis in 2015, but the alliance fractured after Saudi Arabia bombed what it called a weapons shipment bound for Yemeni separatists backed by the UAE.
