UAE to leave Opec and Opec+ in major blow to global oil producers’ group amid Iran conflict
Move comes after the UAE criticises fellow Arab states for not doing enough to protect it from numerous Iranian attacks during the war
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THE United Arab Emirates on Tuesday (Apr 28) said it was quitting Opec and the larger alliance known as Opec+.
This deals a heavy blow to the oil-exporting groups and their de facto leader, Saudi Arabia, at a time when the Iran war has caused a historic energy shock and unsettled the global economy.
The 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.
The UAE’s exit on May 1 will help it meet changing demand, its energy ministry said in a statement on Tuesday, adding that the country will gradually ramp up production.
The UAE’s energy minister, Suhail Mohamed al-Mazrouei, said 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.
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“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 choke point 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.
The UAE’s desire to deploy new production capacity has brought it into conflict with regional rival Saudi Arabia at Opec meetings in recent years.
Tensions have also flared intermittently as the two jostled for regional sway. Earlier this year, Saudi Arabia moved to rein in growing Emirati influence as the two countries backed opposing factions in the war in Yemen.
Disagreements over oil issues have brought Abu Dhabi to the brink of quitting Opec before, though it never followed through.
But the UAE exit from Opec represents a 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 American 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, diplomatic adviser to 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,” he 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.”
Oil prices rose more than 3 per cent on Tuesday, as stalled efforts to end the Iran war kept the Strait of Hormuz largely closed, constraining Middle East supplies, though the UAE’s announcement that it would leave Opec and Opec+ trimmed gains.
Brent crude futures for June climbed 3.1 per cent or US$3.37 to US$111.60 a barrel by 1336 GMT, after gaining 2.8 per cent to close the previous session at their highest since Apr 7. The contract is up for a seventh straight day.
US West Texas Intermediate (WTI) crude for June rose 3.7 per cent or US$3.72 to US$100.09 a barrel, after gaining 2.1 per cent in the previous session. WTI futures rose above the US$100-per-barrel threshold for the first time since Apr 13 on Tuesday.
Prices pared some gains after the UAE announced that it was leaving Opec and Opec+. REUTERS, BLOOMBERG
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