UAE Withdraws from OPEC and OPEC+ as Iran War Escalates, Shifting Global Oil Dynamics

Goldman says UAE's exit from OPEC raises medium-term oil supply upside risk  Reuters

The Emirati state news agency WAM reported on April 28 that the country had decided to withdraw from OPEC and OPEC+ effective May 1 of this year

According to the portal, once production quotas are lifted, the United Arab Emirates could increase output by more than 40%, which will intensify competition in markets supplied by higher-cost producers, including countries in sub-Saharan Africa

Exclusive: OPEC+ likely to agree another oil output hike without UAE, sources say  Reuters

"The influx of UAE crude is anticipated to drive the oil price down and challenge Saudi Arabia’s dominance in the global oil market," Hung Wing Lok said

UAE signalling intent to pursue independent economic policies and reshape Gulf oil politics.

Miguel Jaimes argued that the US is actively seeking to undermine the cohesion of OPEC+, a coalition led by Russia and Saudi Arabia, by applying pressure on member countries - including Russia - over the Ukraine conflict

It is unlikely to have a significant impact on the oil market, Somchai Virunhaphol said

The BBC takes a look in charts at what the UAE's departure could mean for the oil cartel and more widely.

According to Bao Chengzhang, in the face of the Strait of Hormuz closure, the UAE aims to unlock idle capacity and exercise greater flexibility in regulating its oil output by leveraging Fujairah’s unaffected status

Marat Zembatov believes that the UAE leadership may have concluded that the OPEC+ format no longer corresponds to the "changed reality, which is more network-based than cartel-like in nature"

Suhail Al Mazrouei said that closing of the Strait of Hormuz lowered production capacities of many countries

Alparslan Bayraktar added that nations can strive to determine their own policies and form alternative groups under the current circumstances

The shift also opens up new avenues for bilateral energy engagement, according to Yogesh Jambhale, Senior Research Manager at Rubix Data Sciences

The United Arab Emirates is leaving OPEC to pump more oil on its own terms. The break strips Saudi Arabia of a key partner and adds to growing uncertainty over the cartel's future.

OPEC faces a double crisis as it manages both the energy shock caused by the closure of the Strait of Hormuz, and the departure of the UAE. Also in this edition: Airbus reports some disappointing quarterly results. Plus, OxyContin maker Purdue Pharma is sentenced to $5.5 billion in fines for its role in the deadly opioid crisis in the US.

The UAE gave "only nebulous reasons" for leaving OPEC, but they relate to long-standing disputes within OPEC over how much oil its members are allowed to produce, The Globe and Mail reported

What are the impacts of the UAE's decision to pull out of the OPEC oil cartel? NPR's A Martinez speaks with Helima Croft, global head of commodity strategy at RBC Capital Markets.

The UAE will remain a "responsible producer," Suhail Mohamed Al Mazrouei stated

The United Arab Emirates said on Tuesday that it was quitting Opec, dealing a heavy blow to the oil-exporting cartel and its de facto leader, Saudi Arabia, at a time when the Iran war has caused a historic energy shock and rattled the global economy. But what is Opec, and how does it impact consumers? What is Opec? Founded in 1960, the Organisation of the Petroleum Exporting Countries (Opec) is a bloc of oil-exporting nations that coordinate their oil and gas policies as a means of managing the oil market. The founding members were Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, but in 2016 the group expanded into OPEC+, which now comprises 23 countries. The bloc controls slightly over 50 per cent of global crude production, Jorge León, head of geopolitical analysis at Rystad Energy, told Reuters. What is the purpose of Opec? Opec’s main purpose is to reduce volatility in oil markets, León said. He used the example of the Covid-19 pandemic, when oil demand dropped by 20 million barrels a day. The group reduced supply by 10m barrels to stabilise the market. “These are historical examples that show how Opec and Opec+ have managed to manage the market, moving supply from one period to another,” he said. Why is the UAE leaving? The loss of the UAE, a longstanding Opec member, could weaken the group, which has usually sought to show a united front despite internal disagreements over geopolitics and production quotas. So why has the UAE left? León said it comes down to incentives. Being part of a bloc that exists within a growing market is one thing, but when that market shrinks, the incentives shrink as well. “If you’re part of a cartel that operates in a shrinking market, then the incentives to remain in the group are less and less,” he said. “It’s more about who moves first. And right now, it seems like the UAE has taken that step.” The UAE has not attributed its departure to the war, according to CNBC. Energy Minister Suhail Al Mazrouei told CNBC in an interview on Tuesday that the UAE’s exit was timed to “limit the disruption” to fellow producers in the group. According to the minister, it wanted more freedom to make production decisions without Opec constraints, and to reach its goal of 5m bpd of capacity by 2027. The UAE has “chafed” under years of oil production cuts led by the Saudis to support prices, said Andy Lipow, president of Lipow Oil Associates, according to CNBC. What impact will it have? In the short term, León said the impact would be minimal. “Because of the Strait of Hormuz being closed, any additional supply coming from the UAE is quite restrictive at the moment,” León explained. Once the strait reopens, however, the UAE will likely rush to increase oil production and make use of its spare capacity. “They will start pumping as much as they can to reach those five million barrels per day. So in reality, what it means is that there’s more supply to the market in the medium term,” he elaborated. The market may miss Saudi Arabia’s ability to put a floor under prices if oil demand is weak and there’s a big surplus in the future, David Goldwyn, the US State Department’s former special envoy and coordinator for international energy affairs, told CNBC. “There’s a significant risk of higher oil price volatility as a result of this decision,” he said. “But in the end, when market conditions require cooperation, the UAE leaving Opec doesn’t prevent it from cooperating with Opec.” While oil futures prices did not react strongly to the announcement on Tuesday, the move could prove bearish later, John Kilduff, founder of Again Capital, said, according to CNBC. “It undermines the cohesion needed among producers to keep prices from falling too much during supply gluts,” he said. What happens to Opec now? “It really puts a question mark on the future of Opec and Opec+ as a cohesive organisation,” León said, adding that all eyes will now be on Saudi Arabia. As the “central banker” of the oil market, will they continue to take the reins and manage the market? Or will the market become more of a free-for-all? “That is the big question at the moment,” León said. According to CNBC, the UAE was the most influential member of Opec behind Saudi Arabia, as they were among the few members with meaningful spare production capacity — idle production that can be brought online quickly during crises — to influence prices and respond to supply shocks. “Saudi Arabia and the UAE together control a majority of the world’s total spare capacity of more than 4m barrels per day, making them particularly influential during periods of distress,” CNBC said. The UAE’s departure, therefore, removes “one of the core pillars underpinning Opec’s ability to manage the market”, León noted. As a result, Opec will become “structurally weaker”. Goldwyn said that the move would also undermine the Saudis’ ability to manage Opec as an organisation. “Riyadh will still have a significant ability to discipline the market with its own spare capacity, but it will have a weaker hand now that the UAE is no longer a member,” Goldwyn told CNBC.

In Ajai Malhotra's view, this opens up additional opportunities for major importing countries to negotiate more favorable supply terms

Brent crude futures for June dipped 1% to $111.25 a barrel, having climbed for the previous seven sessions

Asian stocks gain and oil prices decline after the UAE says it will exit OPEC  The Washington Post

Sun Degang, director of the Middle East Studies Center at Fudan University, says that the UAE may increase oil production and release additional capacity

Asian stocks gain and oil prices decline after the UAE says it will exit OPEC  AP News

No more quotas: UAE's exit from Opec paves way for independent oil strategy  The National

Asia’s oil import-dependent economies will benefit from the United Arab Emirates’ (UAE) exit from Opec, though the ongoing closure of the arterial Strait of Hormuz may not offer any immediate relief from soaring prices, analysts say. Global oil prices continued to surge on Wednesday, with benchmark Brent crude oil prices hitting US$111 a barrel and US West Texas Intermediate (WTI) approaching US$100 a barrel. Before the Iran war, Brent was trading around US$70 a barrel, while WTI was about US$65...

Oil Falls on UAE’s Plan to Exit OPEC, But Mideast Tensions Limit Decline  WSJ

Watch Understanding the UAE's Decision to Leave OPEC  Bloomberg.com

Watch Why the UAE-Opec Rift Was Years in the Making  Bloomberg.com

United Arab Emirates to leave OPEC  nhk.or.jp

UAE Quits OPEC as War Upends Oil Markets  Bloomberg.com

UAE quitting OPEC could affect Fed policy, market expert says  Reuters

UAE Exit Blindsides OPEC and Threatens to Shake Its Grip on Oil  Bloomberg.com

UAE Quits OPEC as War Upends Oil Markets and Gulf Tensions Rise  Bloomberg

Did the UAE Just Kick Off OPEC’s Farewell Tour?  Bloomberg

HSBC sees limited near-term impact on OPEC+ from UAE's departure  Reuters

According to the article, it will be possible to fully assess the consequences of the step after the resumption of energy transportation through the Strait of Hormuz

The United Arab Emirates has announced it will leave OPEC and OPEC+ on May 1, in a significant blow to the oil cartels.  In a statement, the Gulf country said it was doing so to focus on its national interest.  The country had often expressed frustration at production quotas set by the group, and its relationship with Saudi Arabia, OPEC's de facto leader, had become increasingly tense.

UAE exit weakens OPEC+ power over oil market but group to stay together, sources say  Reuters

'Empowered': UAE's exit from Opec appeases Trump, delivers blow to Saudi Arabia  Middle East Eye

Explainer: What to know about UAE exit from OPEC, OPEC+  Xinhua

Khalil Jahshan, Executive Director of Arab Center Washington DC, said he would view this as "the first expression of the economic and political fallout from the Iran war on the Arab side of the Gulf"

The United Arab Emirates will withdraw from the OPEC and OPEC+ oil cartels to focus on "national interests", it announced on Tuesday, causing fresh shockwaves as energy prices soar over the Middle East war. The UAE, one of the world's top oil producers, which has previously chafed at OPEC production quotas, will pull out on Friday, a statement carried by the official WAM news agency said. FRANCE 24's Camille Corcoran reports.

The UAE’s departure from OPEC may not break the cartel  The Economist

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, he added

Decision by the UAE to leave OPEC shakes up alliance that influences oil prices worldwide  AP News

Defection is damaging to Saudi Arabia’s prestige – and could strengthen the US hand in the region The United Arab Emirates’ decision to walk out of Opec is a political as much as business decision, and will reignite the simmering rows between the UAE and Saudi Arabia – which had been covered up by their shared anger with Iran over its attacks on the Gulf states since the start of the US-Israel war on Tehran. In the short term, leaving the oil producing cartel it joined in 1967 gives the UAE the freedom to respond quickly to a long-term prospect of constrained supplies, and to maximise profit. But it is a decision the UAE has considered before, as UAE and Saudi tensions over production quotas have been longstanding. Continue reading...

The UAE’s decision to withdraw from OPEC and OPEC+ will deal a significant blow primarily to Saudi Arabia

The Gulf state is the latest to quit the group, which was created to form a united ⁠front on oil pricing.

UAE taking advantage of global energy needs by leaving OPEC  The Jerusalem Post

Nabil Jaafar Al-Marsoumi emphasized that "it cannot be ruled out that this move by the UAE will undermine the efforts of OPEC and OPEC+ to control and regulate oil supplies and adjust production in line with global demand"

Suhail Al Mazrouei noted that this is a policy decision

According to the report, the announcement on the withdrawal of one of world’s largest oil producers from associations takes place in a "dramatic moment" when the world faces the severest energy crisis of the last decades

Watch UAE to Leave OPEC in May as Iran War Reshapes Oil Market  Bloomberg.com

Chief Economist at the Stolypin Institute for Economic Growth Boris Kopeikin recalled that the UAE accounts for approximately 4% of global oil production and is estimated to hold more than 7% of all global reserves

UAE says Opec exit aligns with long-term energy strategy  Middle East Eye

UAE Quits OPEC Just as War on Iran Throws Markets Into Turmoil  Bloomberg

It will have little effect on the current oil blockades, but it could change everything afterwards.

In Nikolay Dudchenko's opinion, this decision will have a long-term negative impact on oil prices and lead to a reduction in OPEC+'s influence

Dmitry Kasatkin emphasized that Iran's attacks and the Hormuz blockade had demonstrated that getting Tehran to protect everyone's interests in OPEC would be impossible

The UAE will continue investing across the energy value chain, including oil, gas, renewables, and low-carbon solutions, the state agency noted

The UAE's OPEC Exit Is Existential for the Oil Cartel  Bloomberg

UAE to Exit OPEC and OPEC+ After Nearly 60 Years, Targets Higher Oil Output  The Daily Star Lebanon

The decision of the country followed "a comprehensive review of the UAE’s production policy and its current and future capacity"

According to the Emirates state news agency, the UAE's decision to exit OPEC and OPEC+ "reflects the UAE’s long-term strategic and economic vision and evolving energy profile"

The United Arab Emirates announced on Tuesday that it will leave the Organization of the Petroleum Exporting Countries (Opec) and the wider Opec+ alliance effective May 1, a move that signals a push for greater control over its production strategy. The decision followed “a comprehensive review” of the country’s production policy and capacity, the Ministry of Infrastructure said in a statement, adding that it was based on national interests and a commitment to help meet global market...

The Arab oil producer has long expressed frustration with the quotas it has to follow as part of OPEC, the cartel of major state-owned oil producers.

U.A.E. to Leave OPEC in Blow to Group  WSJ

UAE pulls out of OPEC oil cartels citing 'national interests'  France 24

The source confirmed that the UAE is leaving OPEC and OPEC+

Xinhua News | UAE to exit OPEC, OPEC+ from May 1  Xinhua

UAE quits Opec in blow to global oil cartel  Bangkok Post

UAE to leave OPEC amid Hormuz oil crisis, a blow to Saudi Arabia  The Washington Post

The Organization of the Petroleum Exporting Countries or OPEC is a group of major oil-producing nations. This group coordinates their petroleum production policies to help effectively manage global oil supply and influence crude prices.

The United Arab Emirates announced on Tuesday it will quit the global oil cartel OPEC and OPEC+ to focus on "national interests" as energy prices continue to climb amid the ongoing Iran conflict.

The UAE’s historic decision is a major blow to the alliance of oil producers, just as the global energy crisis is escalating over Iran’s blockade of the Strait of Hormuz, but the Gulf state insists its decision “enhances the UAE’s ability to respond to evolving market needs."

The UAE says it is leaving the Opec and Opec+ groups of major oil producing nations.

UAE's Opec exit follows country's plan for strategic autonomy  The National

Xinhua News | UAE to exit OPEC, OPEC+ from May 1 -- media  Xinhua

UAE to withdraw from OPEC, OPEC+  Anadolu Ajansı

UAE leaves OPEC and OPEC+ in major blow to global oil producers' group  Reuters

The United Arab Emirates (UAE) said on Tuesday it quit Opec and Opec+, dealing a heavy blow to the oil exporting groups and their de facto leader, Saudi Arabia, at a time when the war on iran has caused a historic energy shock and unsettled the global economy. The stunning loss of the UAE, a longstanding Opec member, could create disarray and weaken the group, 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 told Reuters the decision was taken after a careful look at the regional power’s energy strategies. Asked whether the UAE consulted with 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,” said the energy minister. 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 Iranian threats and attacks against vessels. Mazrouei said the move would not have a huge impact on the market because of the situation in the strait. But the UAE exit from OPEC represents a big win for US President Donald Trump, who has accused the organisation 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 move came after the UAE, a regional business hub and one of Washington’s most important allies, criticised fellow Arab states for not doing enough to protect it from numerous Iranian attacks during the war. Anwar Gargash, the diplomatic adviser for the UAE president, criticised the Arab and Gulf response to the Iranian attacks in a session at the Gulf Influencers Forum on Monday. “The Gulf Cooperation Council countries supported each other logistically, but politically and militarily, I think their position has been the weakest historically,” Gargash said. “I expect this weak stance from the Arab League and I am not surprised by it, but I haven’t expected it from the (Gulf) Cooperation Council and I am surprised by it,” he said.

UAE to leave OPEC and OPEC+ as of May 1  nhk.or.jp

Big win for Donald Trump, who has accused organisation of ‘ripping off the rest of the world’ by inflating oil prices Business live – latest updates The United Arab Emirates has quit the Opec oil cartel in a heavy blow to the group and its de facto leader, Saudi Arabia, amid the global energy shock caused by the Iran war. The stunning loss of the UAE, a longstanding Opec member, could create disarray and weaken the group, which has usually sought to show a united front despite internal disagreements over a range of issues from geopolitics to production quotas. Continue reading...

The Gulf government has long complained about the oil cartel’s quotas, which officials believe unfairly limited its exports.

The United Arab Emirates is withdrawing from the OPEC and OPEC+ oil cartels as the Iran war drives a historic energy shock and rattles the global economy.

United Arab Emirates says it will leave OPEC effective May 1  The Washington Post

UAE announces exit from OPEC and OPEC+ effective May 1  WION

The move came after the UAE, a regional business hub and one of Washington’s most important allies, criticised fellow Arab states for not doing enough to protect it from numerous Iranian attacks during the war

UAE to quit OPEC and OPEC+  Middle East Eye

UAE to leave Opec in blow to oil cartel  Financial Times

UAE announces it will leave Opec  The National

United Arab Emirates says it will leave OPEC effective May 1  AP News

UAE leaves OPEC and OPEC+ in huge blow to global oil producers' group  The Straits Times

United Arab Emirates says it is leaving Opec  Middle East Eye

UAE to Leave OPEC in May as Iran War Reshapes Oil Market  Bloomberg.com

The United Arab Emirates will withdraw from the OPEC and OPEC+ oil cartels to focus on "national interests", a statement has said, a bombshell announcement as energy prices soar over the Middle East war.