By Mike Bain, Colin Ambler/cvnznews.com.
The United Arab Emirates has chosen to depart from OPEC and OPEC+ to prioritize its national interests. This strategic decision impacts the oil-exporting groups amidst the US-Israel conflict with Iran, which has generated a substantial energy shock and destabilized the global economy.
Effective Friday, the move demonstrates the UAE’s strategic long-term economic vision and its evolving energy profile, according to a statement released by state media on Tuesday.
“During our time in the organisation, we made significant contributions and even greater sacrifices for the benefit of all,” it added. “However, the time has come to focus our efforts on what our national interest dictates.”
Announcement of its exit on Friday comes as Gulf producers are already struggling to ship exports through the Strait of Hormuz.
The UAE’s departure would destabilize OPEC and undermine the cartel’s ability to present a unified position, exposing internal divisions on critical matters from geopolitics to production quotas.
UAE Energy Minister Suhail Mohamed al-Mazrouei said the decision was taken after a careful look at the regional power’s energy strategies. Asked whether the UAE consulted with OPEC heavyweight Saudi Arabia, he said the UAE did not raise the issue with any other country.
“This is a policy decision. It has been done after a careful look at current and future policies related to level of production,” the minister told the Reuters news agency.
OPEC’s Gulf producers have already been struggling to ship exports through the Strait of Hormuz, a narrow chokepoint between Iran and Oman through which a fifth of the world’s crude oil and liquefied natural gas supplies normally pass, because of threats and attacks against vessels during the war.
United States President Donald Trump has previously accused OPEC of “ripping off the rest of the world” by inflating oil prices.
Trump has also linked US military support for the Gulf with oil prices, saying that while the US defends OPEC members, they “exploit this by imposing high oil prices”.
The UAE had been a member of OPEC first through its emirate of Abu Dhabi in 1967 and later when it became its own country in 1971.
The oil cartel, based in Vienna, has seen some of its market power wane as the US has increased its production of crude oil in recent years.
Additionally, the UAE and Saudi Arabia have increasingly competed over economic issues and regional politics, particularly in the Red Sea area.
The two countries had joined a coalition to fight against Yemen’s Iran-backed Houthi rebels in 2015. However, that coalition broke down into recriminations in late December when Saudi Arabia bombed what it described as a weapons shipment bound for Yemeni separatists backed by the UAE.
The energy research company Rystad Energy said the UAE’s withdrawal marks a significant shift for the oil-producing group.
“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,” Rystad Energy’s head of geopolitical analysis, Jorge Leon, said in a statement.
“With demand nearing a peak, the calculation for producers with low-cost barrels is changing fast, and waiting your turn inside a quota system starts to look like leaving money on the table,” he continued.
“Saudi Arabia is now left doing more of the heavy lifting on price stability, and the market loses one of the few shock absorbers it had left.”
