UAE leaves OPEC in blow to oil cartel amid war on Iran | Oil and Gas News

Announcement of May 1 exit comes as Gulf producers are already struggling to ship exports through the Strait of Hormuz.

The United ‌Arab Emirates (UAE) has announced its decision to quit OPEC and OPEC+ to focus on “national interests”, dealing ⁠a heavy ⁠blow to the oil-exporting groups at a time when the US-Israel war on Iran has caused ⁠a historic energy shock and rattled the global economy.

The move, which will take effective on May 1, reflects “the UAE’s long-term strategic and economic vision and evolving energy profile”, a statement carried by state media said 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.”

The loss of the UAE, a longstanding OPEC member, could create disarray and weaken the bloc, which has usually sought to show a united ⁠front despite internal disagreements over a range of issues 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 energy minister told Reuters news agency.

OPEC 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 normally passes, because of threats and attacks against vessels amid 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 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 in together in 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.

Energy research company Rystad Energy said the UAE’s withdrawal marks a significant shift for the oil-producer 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.”