United Arab Emirates yes announced it would leave OPEC and OPEC+ on May 1, ending membership that began in 1967 – four years before the United Arab Emirates was established as a state. This signals a turning point in the UAE’s role in global energy.
Government statement published on the state news agency WAMHe cited a comprehensive review of the country’s manufacturing policy and capacity as the basis for the move, calling it a reflection of the “UAE’s long-term strategic and economic vision and evolving energy profile.”
The decision, it said, is rooted in the national interest and a commitment to meeting what it called “urgent market needs,” a reference to global demand that the UAE says is under-met at a time of significant supply disruptions.
The statement took into account the geopolitical context – including the ongoing conflict with Iran, which has severely restricted the flow of tankers through the Strait of Hormuz – the narrow waterway between Iran and Oman through which roughly one fifth of the world’s reserves of crude oil and liquefied natural gas passes normally.
EIA estimates that Iraq, Saudi Arabia, Kuwait, the United Arab Emirates, Qatar and Bahrain had crude oil production of 7.5 million barrels per day in March and 9.1 million barrels per day in April.
However, the statement said that leaving the EU was a policy rather than a reactionary matter, noting that “underlying trends point to a sustained increase in global energy demand over the medium and long term.”
A long-lasting dispute
Tuesday’s announcement was not without precedent. In 2021 The United Arab Emirates refused to approve a production agreement to extend production cuts unless its individual quota was raised, arguing that it had invested billions to expand production capacity and that it had been unfairly constrained by 2018 figures. A compromise was ultimately reached, but the episode revealed an underlying tension: the UAE wants to produce more, and OPEC’s quota system is holding it back.
Since then, these ambitions have only increased. State oil company ADNOC has declared target of 5 million barrels per day by 2027compared to current production of approximately 3.4 million. Under the OPEC+ agreement, the country remained at around 3.2 million barrels per day while production capacity exceeded 4 million, a gap that makes continued membership increasingly tough to justify.
United Arab Emirates stressed that his exit does not mean withdrawing from global energy responsibility. It committed to bringing additional production to market “in a gradual and measured manner, responsive to demand and market conditions” and confirmed investment plans in oil, gas, renewables and low-carbon technologies.
The statement noted that leaving OPEC would make the country more adaptable in responding to market dynamics; OPEC sets production limits, which means the world’s largest producers can often supply and sell more oil than they actually do.
By limiting supply, the group is able to support prices. This mechanism primarily benefits producers that are highly dependent on oil revenues – a description that fits Saudi Arabia much more than the United Arab Emirates, whose non-oil economy currently accounts for around 75 percent of GDP.
Market reaction and wider implications
The immediate market reaction was fierce. Brent crude, the European benchmark, has been exceeded $100 per barrel for the first time since April 8 and has risen to $111 as of this writing.
The long-term consequences for OPEC are more significant. The group has been under strain for months, with several members – including Iraq, Kazakhstan and the United Arab Emirates itself – exceeding their quotas and being banned. required for compensation. The departure of the United Arab Emirates deprives the group of its third-largest producer at a time when supply dynamics are already breakable.
The exit follows Qatar’s departure from the group in 2019 and as OPEC prepares for Wednesday’s meeting in Vienna.
“It is time to focus our efforts on what our national interest dictates and on our commitment to our investors, customers, partners and global energy markets,” the statement said.
The United Arab Emirates said it valued over fifty years of cooperation within OPEC and wished the organization continued success.
This story originally appeared on WIRED Middle East.