The United Arab Emirates has announced its decision to exit the Organization of the Petroleum Exporting Countries (OPEC) and OPEC+ effective Friday, citing an unprecedented energy crisis linked to the Iran conflict that has revealed divisions among Gulf nations.
The UAE has been a longstanding member of OPEC since 1967 through its emirate of Abu Dhabi and later as an independent country from 1971. OPEC+, formed in 2016, consists of an alliance with other oil-producing nations.
Despite accounting for around 40% of global oil production, OPEC’s influence has diminished in recent years due to increased oil production by the United States.
The departure of the UAE, a major producer within the group, weakens OPEC’s grip on global oil supplies and deepens the rift with neighboring Saudi Arabia, the de facto leader of OPEC. This move could allow the UAE to boost its production levels independently once Gulf exports resume, freeing it from OPEC quotas.
The UAE made the announcement through its state-run WAM news agency, emphasizing its long-term strategic vision and commitment to responsible global energy market participation. Energy Minister Suhail Mohamed al-Mazrouei stated that the decision was made after careful consideration of regional energy strategies, with no prior consultation with Saudi Arabia or any other nation.
Tensions between the UAE and Saudi Arabia, exacerbated by political and economic disputes in the Middle East, have escalated as both countries faced attacks from Iran, an OPEC member. The ongoing challenges in shipping oil exports through the Strait of Hormuz due to Iranian threats have further complicated the situation.
The UAE’s exit from OPEC has been seen as a victory for U.S. President Donald Trump, who has criticized the organization for manipulating oil prices. This move follows the UAE’s criticism of fellow Arab states for not adequately protecting it against Iranian attacks during the conflict.
The departure, rumored for some time, reflects the UAE’s pushback against what it perceived as restrictive OPEC production quotas. With global spare capacity at historically low levels, the UAE’s ability to add extra oil to the market outside of OPEC raises questions about Saudi Arabia’s role as the market’s primary stabilizer.
While the immediate market impact of the UAE’s withdrawal is expected to be minimal due to the ongoing conflict in Iran, the long-term implications could lead to increased oil production from the UAE, potentially disrupting market stability. This decision underscores the evolving geopolitical landscape where multilateral alliances are shifting, indicating a more competitive global environment according to energy expert Heather Exner-Pirot.
