The United Arab Emirates has decided to leave the OPEC group of oil producers after six decades of membership, amidst an energy supply shock in the Middle East spurred by the US-Israeli war with Iran.
The UAE announced the decision through the state-run WAM news agency, effective from May 1. OPEC, the Organisation of Petroleum Exporting Countries, was founded in Iran in 1960 and aims to coordinate production among member countries, stabilise oil markets, and maintain steady supply and income.
The UAE joined OPEC in 1967, and its departure will leave the oil cartel with 11 member countries, including Saudi Arabia, Iran, and Iraq. A statement from WAM read: “This decision follows a comprehensive review of the UAE’s production policy and its current and future capacity and is based on our national interest and our commitment to contributing effectively to meeting the market’s pressing needs.”
The statement added: “While near-term volatility, including disruptions in the Arabian Gulf and the Strait of Hormuz, continues to affect supply dynamics, underlying trends point to sustained growth in global energy demand over the medium to long-term.” Following its exit, the UAE said it would “continue to act responsibly, bringing additional production to market in a gradual and measured manner.”
Reports indicate that the UAE has expressed frustrations with production quotas agreed by OPEC members to control oil prices, and the decision also reflects a desire for greater flexibility. However, the announcement comes at a fraught time in the Middle East, with the closure of the Strait of Hormuz disrupting oil and gas supplies worldwide and sending prices soaring.
