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.
Opec Gulf producers have already been struggling to ship exports through the strait of Hormuz, a narrow 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.
The UAE’s energy ministry said that the constraints on the strait meant the decision to leave would not have a huge effect on the market. Leaving Opec will give it greater “flexibility” and was in line with its “long-term strategic and economic vision”, he said.
The UAE joined Opec in 1967 through the Emirate of Abu Dhabi and remained in the organisation when the UAE was formed in 1971. Its departure will come into effect on Friday.
However, the UAE’s exit from Opec, and its sister group Opec+, represents a big win for Donald Trump, who has accused the organisation of “ripping off the rest of the world” by inflating oil prices.
The Brent crude oil price has reached as high as $119.50 a barrel since the outbreak of the war in Iran. On Tuesday, it rose 3.4% to $111.67.
The US president has also linked American military support for the Gulf with oil prices, saying that while his country 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 Middle East conflict.
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.
Jorge León, an analyst at Rystad, said: “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.
“While near-term effects may be muted given ongoing disruptions in the strait of Hormuz, the longer-term implication is a structurally weaker Opec.”
He added: “Outside the group, the UAE would have both the incentive and the ability to increase production, raising broader questions about the sustainability of Saudi Arabia’s role as the market’s central stabiliser – and pointing to a potentially more volatile oil market as Opec’s capacity to smooth supply imbalances diminishes.”
