The United Arab Emirates has withdrawn from the Opec oil cartel, delivering a significant blow to the group and its de facto leader, Saudi Arabia, amid the global energy shock triggered by the Iran war.
Impact on Opec and Global Oil Markets
The loss of the UAE, a longstanding Opec member, could create disarray and weaken the organization, which has historically sought to present a united front despite internal disagreements over geopolitics and production quotas. Opec Gulf producers have already faced challenges shipping exports through the Strait of Hormuz, a narrow passage between Iran and Oman through which a fifth of the world’s crude oil and liquefied natural gas normally flows, due to Iranian threats and attacks on vessels.
The UAE’s energy ministry stated that the constraints on the strait mean the decision to leave would not have a major impact on the market. The exit will grant the UAE greater flexibility and aligns with its long-term strategic and economic vision. The UAE joined Opec in 1967 through the Emirate of Abu Dhabi and remained in the organization when the UAE was formed in 1971. Its departure takes effect on Friday.
Political Implications
The UAE’s exit from Opec and its sister group Opec+ represents a notable victory for Donald Trump, who has accused the organization 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 Iran war. On Tuesday, it rose 3.4% to $111.67. Trump has also linked American military support for the Gulf with oil prices, arguing that while the US defends Opec members, they exploit this by imposing high oil prices.
The move follows the UAE’s criticism of fellow Arab states for insufficient protection against numerous Iranian attacks during the Middle East conflict. Anwar Gargash, diplomatic adviser to the UAE president, criticized the Arab and Gulf response to Iranian attacks at the Gulf influencers forum on Monday. He stated that the Gulf Cooperation Council countries supported each other logistically, but politically and militarily, their position has been historically weak. He expressed surprise at the weak stance from the GCC, though he expected it from the Arab League.
Analyst Perspectives
Jorge León, an analyst at Rystad, commented: “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.”
The UAE’s departure could reshape the dynamics of global oil markets, potentially leading to increased volatility and a reconfiguration of alliances among major producers.
