Kamal Ghorui
In a major shake-up for global oil markets, the United Arab Emirates will withdraw from OPEC and OPEC+ with effect from May 1, AFP reported citing state media on Tuesday.“This decision reflects the UAE’s long-term strategic and economic vision and evolving energy profile,” the official WAM news agency said, AFP quoted.UAE Energy Minister Suhail Mohamed al-Mazrouei told Reuters the decision was taken after a careful review of the country’s present and future energy strategy.“This is a policy decision, it has been done after a careful look at current and future policies related to level of production,” Mazrouei said.Asked whether Abu Dhabi had consulted Saudi Arabia, he said the UAE had not raised the matter with any other country.Mazrouei also said the move would not have a major immediate market impact because of disruptions in the Strait of Hormuz, through which around a fifth of the world’s crude oil and liquefied natural gas normally passes.OPEC Gulf producers have already faced difficulties shipping exports through the chokepoint between Iran and Oman amid Iranian threats and attacks on vessels.Analysts said the exit could weaken OPEC’s long-term ability to influence prices because the UAE is one of the few members with meaningful spare capacity.“The UAE withdrawal marks a significant shift for OPEC. Alongside Saudi Arabia, it is one of the few members with meaningful spare capacity – the mechanism through which the group exerts market influence,” Jorge Leon, analyst at Rystad, told Reuters.He said the longer-term implication was “a structurally weaker OPEC” and a potentially more volatile oil market.Ajay Parmar, Director of Energy and Refining at ICIS, told Reuters the UAE had disagreed with broader OPEC policy for some time.“It also signifies the general drift in the historically strong alliance between the UAE and Saudi Arabia,” he said.Sergey Vakulenko of Carnegie Russia Eurasia Center said the UAE had planned to grow oil output by up to 30 per cent, something difficult within OPEC quotas.“Without the UAE, OPEC will be much weaker… It was mostly done by UAE and Saudi Arabia,” Reuters quoted him as saying.The move may also be seen as a win for US President Donald Trump, who has repeatedly criticised OPEC for keeping oil prices high.It came after the UAE publicly criticised fellow Arab states over what it saw as an inadequate political and military response to repeated Iranian attacks during the war.Anwar Gargash, diplomatic adviser to the UAE president, said Gulf states supported each other logistically, but “politically and militarily, I think their position has been the weakest historically”.
