UAE exits OPEC amid economics

The United Arab Emirates said on April 28 that it will leave OPEC and OPEC+ on May 1 after more than five decades in the group. (wam.ae) (apnews.com) State news agency WAM said the decision followed a review of the country’s production policy, current and future capacity, and “national interest.” The government said the move fits a long-term economic strategy and heavier investment in domestic energy production. (wam.ae) (economymiddleeast.com) The exit removes OPEC’s third-largest producer, behind Saudi Arabia and Iraq, from the cartel’s formal quota system. CNBC reported the UAE had been the group’s third-biggest producer before the announcement. (cnbc.com) (apnews.com) OPEC was created in 1960 to coordinate petroleum policy among major exporters, and OPEC+ later added outside producers including Russia. The UAE’s departure means Abu Dhabi will no longer be bound by those collective output decisions. (opec.org) (energyconnects.com) Reuters reported that delegates and analysts still expect the rest of OPEC+ to keep coordinating supply, even after the UAE leaves. Kremlin spokesman Dmitry Peskov said on April 29 that Russia would remain in OPEC+ and hoped the alliance would continue operating. (reuters.com) (usnews.com) The timing lands in a volatile oil market. Reuters said oil settled nearly 3% higher on April 28 as supply fears tied to the Strait of Hormuz outweighed worries that the UAE’s exit could add more barrels later. (msn.com) (reuters.com) Analysts quoted by Reuters said the split cuts some of OPEC+’s leverage because the UAE has been one of the group’s fastest-growing producers. The country has pushed for more room to use expanded capacity, a point of friction inside the alliance in earlier quota disputes. (reuters.com) (theconversation.com) AP reported the departure strips the cartel of a member that helped give it weight in global supply talks. The immediate test is whether the UAE raises output beyond former OPEC limits once the May 1 exit takes effect. (apnews.com) (reuters.com)