The United Arab Emirates has announced its decision to quit OPEC and OPEC+ to focus on "national interests", dealing a heavy blow to the oil-exporting groups at a time when the US-Israel war on Iran has caused a historic energy shock. The move took effect on May 1st, ending nearly six decades of UAE membership in the cartel. Before the start of the war, the UAE's production capacity had grown to 4.8 million barrels per day, but under its OPEC agreement, it was only allowed to produce 3.2 million bpd. The Economist notes the decision signals a deepening rift with Saudi Arabia and a strategic pivot toward America and Israel. Ole Hansen, Head of Commodity Strategy at Saxo Bank, said the UAE had "seized the opportunity to exit OPEC, removing the production quota straitjacket that for years frustrated the oil-rich nation." Energy strategist Kingsmill Bond at Ember Future argues the UAE is "preparing for a world after the Iran war where oil demand is in decline, and OPEC's power to maintain control and discipline will be weaker." The departure could be a blow to Saudi Arabia's control over prices in the group it has long led in practice. For now, with the Strait of Hormuz still closed, the UAE's exit will have limited immediate market impact — but its long-term consequences for OPEC's cohesion could be profound.
Sources: Al Jazeera, Gulf News, The Economist