UAE quits OPEC in blow to cartel that could reshape global oil markets
By Hanna Ziady, Mostafa Salem, Sarah Tamimi CNN
London/Abu Dhabi (CNN) — The United Arab Emirates will leave a decades-old cartel of the world’s top oil exporters, delivering a major blow to the group that will ripple through the global oil market at a time of unprecedented turmoil caused by the Iran war.
The UAE plans to withdraw from the Organization of the Petroleum Exporting Countries (OPEC) on Friday, the UAE’s state news agency WAM reported Tuesday. The decision also extends to OPEC+, a larger group that consists of other oil producers such as Russia.
The decision followed a review of the UAE’s “current and future capacity and is based on our national interest and our commitment to contributing effectively to meeting the market’s pressing needs,” according to a statement from the news agency.
OPEC is a group of the world’s biggest oil exporters that coordinates output in order to influence global supply and prices. The move will allow the UAE — one of OPEC’s top three producers — to break free from the output limits imposed by the cartel.
OPEC quotas had most recently limited the UAE to 3.2 million barrels of production a day, when in fact it has capacity to produce closer to 5 million barrels a day, Robin Mills the CEO of Dubai-based consultancy QamarEnergy told CNN’s Connect the World.
The implications for global energy markets of the UAE pumping more oil will likely be limited in the short-term, however, given that the Strait of Hormuz still remains largely shut. A large share of the oil and natural gas exported by Gulf producers transits through the strait in normal times.
“But it does suggest that global supplies will be higher than would otherwise be the case once the Strait of Hormuz re-opens,” David Oxley, chief climate and commodities economist at consultancy Capital Economics wrote in a note.
The “bigger picture is that the UAE has been itching to pump more oil,” having invested heavily in expanding production capacity in recent years, he added.
In a statement on X, the UAE’s energy minister Suhail Al Mazrouie, said the decision reflected “long-term market fundamentals.”
“We remain committed to energy security, providing reliable, responsible, and lower-carbon supply while supporting stable global markets,” he added.
OPEC collectively accounts for just over a third of world crude oil production and 79% of total proven crude reserves, according to its own figures. The UAE has been a member of the group since 1967.
The announcement reflected an “intensifying focus on national interests” among Gulf countries, according to Robert Mogielnicki, the head of Polisphere Advisory, a Paris-based consulting firm. “This decision has been in the works for some time, but it comes at a pivotal moment for the (Middle East) and OPEC itself,” he told CNN.
— This is a developing story and will be updated.
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