The United Arab Emirates’ decision to leave OPEC has sent shockwaves through global energy markets, coming at a time of escalating tensions in the Middle East, surging oil prices and growing uncertainty over the resilience of the global energy system.
Abu Dhabi, the third-largest producer within the cartel, confirmed it will withdraw with immediate effect from 1 May, raising questions over both the timing and the broader geopolitical and economic consequences of the move.
Initial market reaction was sharp, particularly against the backdrop of stalled US-Iran talks, although prices later stabilised. This was largely attributed to the already tight physical oil market, driven by the effective blockage of the Strait of Hormuz.
At around 18:30 Greek time, Brent crude stood at 111 dollars per barrel, with weekly gains approaching 6%, while US WTI hovered near 100 dollars.
Major financial institutions including Citigroup and Morgan Stanley had already revised their price forecasts upwards earlier this week, citing declining global inventories and the lack of any diplomatic breakthrough that could restore safe passage through Hormuz.
UAE Energy Minister Suhail Mohammed Al Mazrouei said the decision followed a careful reassessment of the country’s energy strategy, stressing that the impact on markets is expected to be limited due to the current disruption in shipping through the strait.
Gulf producers have already faced severe export constraints because of Iranian threats and attacks on vessels, meaning that changes to OPEC’s structure are unlikely to have an immediate effect on actual flows.
Long-standing tensions with Saudi Arabia
The move reflects long-standing friction between the UAE and Saudi Arabia over OPEC production quotas.
The Emirates, which were producing around 3.4 million barrels per day before the war, have for years expressed frustration at limits imposed by the cartel, arguing they prevent the country from maximising output and revenues.
Abu Dhabi has consistently maintained that it should be allowed to produce at full capacity, using oil income to fund its next phase of economic development and prepare for a post-oil future.
Saudi Arabia, however, has continued to push for production caps in order to support prices, effectively restricting UAE output.
Relations between the two countries deteriorated further in recent months, as broader tensions among Gulf powers resurfaced, including disagreements over their respective roles and backing of rival factions in Yemen.
While both sides have opposed Iran-backed Houthi forces, Saudi Arabia has focused on maintaining a central government aligned with its interests and securing its borders. The UAE, by contrast, has supported strong local and separatist forces in southern Yemen, seeking influence over key ports and strategic maritime routes in the Red Sea and Gulf of Aden.
War and security tensions as a catalyst
Although Gulf states initially appeared united in response to the outbreak of war and the shock of Iran’s attacks on regional infrastructure, divisions quickly resurfaced.
The UAE has openly criticised fellow Gulf countries for what it sees as insufficient political and military support in the face of repeated Iranian strikes.
Anwar Gargash, diplomatic adviser to the UAE president, said earlier this week that while Gulf Cooperation Council states provided logistical support to one another, their political and military stance was “historically the weakest”.
The Emirates were among the hardest hit by Iranian attacks, a development widely interpreted as a deliberate move by Tehran against one of Washington’s closest regional allies.
This appears to have been a decisive factor in accelerating Abu Dhabi’s strategic reassessment, including its position within OPEC and its broader network of alliances.
Strategic timing and future production
The timing of the withdrawal suggests the current crisis provided an opportunity to act without triggering immediate disruption to already strained markets or strong political backlash from Washington.
Once shipping routes through Hormuz are restored, the UAE will be free to increase production significantly and expand exports at elevated prices, potentially supplying Western markets facing depleted reserves.
Analysts say this flexibility has been a key long-term objective for the Emirates.
Firas Maksad, Middle East director at Eurasia Group, noted that the UAE had grown increasingly dissatisfied with being forced to curb production while Saudi Arabia favoured tighter supply.
He added that broader political differences have intensified, particularly in relation to the war and responses to the Iranian threat, with the UAE deepening ties with the United States and Israel while other regional actors pursue more balanced strategies.
A blow to OPEC and a gain for Washington
The departure is widely seen as a structural blow to OPEC, undermining its cohesion and long-term ability to influence global oil prices.
Saudi Arabia is expected to remain the only member with substantial spare production capacity, raising concerns about the group’s ability to maintain discipline among producers.
The development is also likely to be welcomed in Washington. US President Donald Trump has repeatedly criticised OPEC, accusing it of distorting markets by artificially controlling supply rather than allowing prices to be set freely.
In a 2018 address to the United Nations General Assembly, he accused the organisation of “exploiting the rest of the world”.
The UAE’s exit therefore aligns with longstanding US positions and could weaken a bloc that includes countries often seen as strategic competitors to the United States.
At the same time, Iran remains a member of OPEC, while Russia continues to play a central role through the broader OPEC+ alliance alongside Saudi Arabia, maintaining significant influence over global energy dynamics at a time when Moscow is also pursuing its own strategic interests amid the war in Ukraine.
Source: newmoney.gr