UAE Quits OPEC, Weakening Global Oil Cartel
The United Arab Emirates (UAE) announced on Tuesday that it will leave the Organization of the Petroleum Exporting Countries (OPEC) , ending nearly six decades of membership in the world's most influential oil cartel. The UAE— OPEC's third-largest producer and a member since 1967 through the emirate of Abu Dhabi— said it would sever its ties within days, formally exiting on 1 May. The country's energy ministry framed the move as a bid for greater flexibility in a new energy age. The announcement lands during the ninth week of the US-Israeli war on Iran, which has blocked roughly a fifth of the world's seaborne oil from passing through the strait of Hormuz and has driven crude prices to historic highs.
The split has been brewing for years. OPEC quotas had capped Emirati output at between 3 and 3.5 million barrels per day, even though Rystad Energy estimates the country's total capacity at roughly 4.8 million. Officials in Abu Dhabi had grown frustrated with sacrificing revenue to prop up an arrangement dominated by Saudi Arabia, OPEC's de facto leader. The Iran war has sharpened those tensions: presidential adviser Anwar Gargash recently criticised fellow Gulf states for failing to shield the UAE from Iranian attacks. The BBC notes the UAE was OPEC's most important swing producer after Saudi Arabia, meaning its departure undermines the cartel's core mechanism for steering prices. Analysts also point to the global energy transition, as low-cost producers race to monetise reserves before fossil-fuel demand fades.
The fallout could reshape oil markets worldwide. The UAE has signalled it will lift production in a gradual and measured manner, eventually targeting around 5 million barrels per day. Jorge León of Rystad warned that while near-term effects may be muted, the longer-term implication is a structurally weaker OPEC. Saudi Arabia could retaliate with a price war, a strategy the UAE's diversified economy might withstand but which could devastate poorer members. US President Donald Trump, who has accused OPEC of ripping off the rest of the world, welcomed the news; last week he confirmed Washington had discussed a currency-swap lifeline for Abu Dhabi. With benchmark crude already hovering near $111a barrel, drivers from London to Lagos may soon feel the consequences at the pump.