A major blow to OPEC: United Arab Emirates leaves cartel

The United Arab Emirates will leave the Organization of the Petroleum Exporting Countries (OPEC) and the broader group of OPEC+ producers on May 1, state news agency WAM announced today. The UAE’s Ministry of Energy said the move would give the country greater flexibility to respond to market changes in the current situation. The decision came as a surprise, and the UAE did not consult other members in advance. Reuters reported that it was a major blow to OPEC.

The UAE’s decision could weaken the organization’s unity and the position of its de facto leader, Saudi Arabia, at a time when the US-Israeli war against Iran has caused a shock in energy commodity markets and disrupted the global economy. The United Arab Emirates is one of OPEC’s key producers.

“The United Arab Emirates’ decision to leave OPEC from May 1 is one of the biggest blows to the cartel’s operations in recent years — and comes at a time when the global oil market is exceptionally fragile,” analyst Petr Lajsek of Purple Trading told the Czech News Agency (ČTK).

“This is no insignificant player. The UAE is OPEC’s third-largest producer, with output of around 3.3 to 3.5 million barrels per day,” he added.

The announcement that the UAE is leaving the organization comes at the right time and will have no significant impact on the market given the current restrictions on oil shipments through the Strait of Hormuz, Emirati Energy Minister Suhail Al Mazrouei told Reuters. He also said the decision comes at a time when the world is facing an unprecedented situation, as strategic stocks of petroleum products are falling to alarming levels.

The United Arab Emirates has been a member of OPEC for decades. The emirate of Abu Dhabi joined in 1967; since 1971, the member has been the united country comprising several emirates.