UAE exits OPEC, dealing blow to global oil producers’ group

The United Arab Emirates has announced it will withdraw from the OPEC and OPEC+ oil alliances, a dramatic move that lands a significant blow on the producers’ bloc as an extraordinary energy crisis sparked by the US-Israeli war on Iran lays bare growing rifts across the Gulf.

The departure of the UAE, a longtime OPEC member, threatens to erode the group’s influence. OPEC has typically worked to project unity even when disputes over geopolitics and output targets have simmered beneath the surface.

UAE Energy Minister Suhail Mohamed al-Mazrouei told Reuters the decision followed a careful review of the country’s broader energy strategy.

Asked whether the UAE had consulted Saudi Arabia, OPEC’s dominant power, he said Abu Dhabi had not discussed the matter with any other country.

The UAE’s announcement pared back earlier gains in oil prices.

Production constrained by US-Israeli war on Iran

Gulf producers in OPEC have been grappling with major export disruptions through the Strait of Hormuz, the narrow waterway that normally carries a fifth of the world’s crude oil and liquefied natural gas, after Iran threatened shipping in response to US and Israeli strikes.

Before the US-Israeli war on Iran began on 28 February, between 125 and 140 vessels passed through the strait each day.

Mr Mazrouei said the UAE’s decision to leave OPEC and OPEC+ from 1 May would not have a major market impact because traffic constraints in the strait were already limiting supply.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, are collectively known as OPEC+, and the UAE ranked as the group’s fourth-largest producer.

Before the war, the alliance accounted for nearly half of global oil supply.

The International Energy Agency said OPEC+ saw its share of world oil output drop to 44% in March from about 48% in February.

That figure is expected to decline further in April as shut-ins across the region deepen.

“This opens the door for the UAE to gain global market share when the geopolitical situation normalises,” said Monica Malik, chief economist at ADCB.

She added that the exit should ultimately benefit consumers as well as the wider global economy.

The UAE is both a regional business and financial centre and one of the United States’ closest allies.

In recent years, it has pursued an increasingly assertive foreign policy, building out its own network of influence across the Middle East and Africa.

The country has also strengthened ties with the United States and Israel, with which it established relations under the 2020 Abraham Accords, particularly after it came under attack during the Iran war.

Abu Dhabi sees its relationship with Israel as both a vital instrument of regional influence and a distinct line into Washington.

Win for Trump

The UAE’s break with OPEC marks a political victory for US President Donald Trump, who told the UN General Assembly in 2018 that the group was “ripping off the rest of the world” by driving up oil prices.

Mr Trump has likewise tied US military protection for Gulf states to energy costs, arguing that while Washington defends OPEC members, they “exploit this by imposing high oil prices”.

The UAE’s exit followed remarks by Anwar Gargash, diplomatic adviser to the UAE president, who criticised the Arab and Gulf response to recent Iranian attacks during a session at the Gulf Influencers Forum yesterday.

At the same time, some Gulf leaders gathered in person in Saudi Arabia at a summit that, according to a Gulf official, was intended to shape a response to the thousands of Iranian missile and drone strikes their countries have endured since the US and Israel began their war on Iran in late February.

The UAE’s departure from OPEC also comes at a moment when global spare capacity is hovering near historically low levels, tightening the market even further.

Outside the producer alliance, the UAE would be free to make full use of its position as a supplier of some of the world’s lowest-cost and lowest-carbon barrels.

Mr Mazrouei said the UAE had been part of OPEC and OPEC+ for many years, but added that rising global energy demand meant the country believed its move would help meet future needs.