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By Matthew Robinson, Brendan Cole, and Mandy Taheri
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The United Arab Emirates (UAE) has announced plans to leave the group of the world's leading oil exporters, OPEC and OPEC+, on May 1.
The abrupt decision by the UAE, which has been a member of OPEC for six decades, reflects intensified rivalry with Saudi Arabia and current pressures from the Iran war on Gulf countries exporting oil.
The move could deliver a boost for U.S. President Donald Trump, who has accused the group of "ripping off the rest of the world" by inflating oil prices.
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"This decision reflects the UAE's long-term strategic and economic vision and evolving energy profile, including accelerated investment in domestic energy production, and reinforces its commitment to a responsible, reliable, and forward-looking role in global energy markets," the UAE's government said on Tuesday, according to the Associated Press.
Why It Matters
The UAE's announcement comes at a time of crisis for the global energy market, as the war in Iran has hampered the flow of tankers through the critical Strait of Hormuz, through which around a fifth of the world's oil passes. The UAE has accused its Gulf state neighbors of not doing enough to protect it from Tehran's attacks during the Iran war.
The price of Brent crude, the global benchmark, topped $111 on Tuesday, up nearly 4 percent as talks over reopening the strait remain at an impasse.
The exit from OPEC of such a longstanding member is likely to create instability within the group, which has usually sought to present a united front despite internal disagreements.
What To Know
The UAE joined OPEC in 1967, and its departure will mean that the bloc will lose around 15 percent of its capacity.
Nikos Tzabouras, a senior market analyst at Tradu.com, told Newsweek that as one of the top OPEC producers, the UAE's exit threatens to weaken the group and its tight grip on the oil market at a crucial juncture.
"While the exact strategic calculations behind the move remain fluid, the UAE likely seeks greater flexibility to ramp up output in response to the energy shock from the Middle East conflict - a shift that bears bearish implications for oil prices," he said Thursday.
"However, the near-term market impact is likely to be limited. Supply will require significant time and effort to be restored, even if the Strait of Hormuz were to fully reopen."
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Saudi Arabia and UAE Tensions
Saudi Arabia is one of the UAE's only two landlocked neighbors, alongside Oman, and the countries share a long and at times complicated diplomatic relationship. The two countries are also partners through the Gulf Cooperation Council (GCC), which was founded in 1981, and have at times aligned on security, oil policy and opposition to Iran. Their relationship has, however, also been marked by disagreements.
During the Arab Spring, the neighbors formed a strong front against Islamist movements, and later boycotted Qatar over allegations of supporting terrorism, which Doha denied.
In 2020, the UAE normalized relations with Israel under the U.S.-brokered Abraham Accords, while Saudi Arabia did not. The following year, Saudi Arabia and the UAE clashed over an OPEC+ proposal to raise oil output while extending production limits, with the UAE pushing for a higher baseline.
Outside of oil politics, the two countries are also clashing over strategic priorities as they vie for regional influence. In Yemen, both countries support groups fighting the Iran-backed Houthis; however, in recent years, the coalition has broken down. The UAE backs the Southern Transitional Council (STC), which controls much of Yemen’s south, including key oil and port infrastructure, while Saudi Arabia supports the government, the Presidential Leadership Council (PLC).
Saudi Arabia and the UAE have maintained close ties to the U.S.
Despite simmering regional tensions, Emirati Energy Minister Suhail al-Mazrouei said on Tuesday that his country’s decision did not stem from any disagreement or conflict with Saudi Arabia, telling CNBC, "We’ve been working together for years and years. We have the highest respect for the Saudis for leading OPEC."
The UAE’s departure from OPEC highlights the long-running tensions it has with Saudi Arabia over the group's oil production and geopolitical strategy. Riyadh has backed curbs on oil production from the group to prop up the oil market, while the UAE is said to have become frustrated with the limits and is looking to pump more oil to fund its plans for a low-carbon future.
Lara Tandy, from intelligence and risk consultancy group S-RM, said that the UAE's departure from OPEC and OPEC+ showed it was prioritizing its national interests and shifting its energy policy and strategy.
"These have been brought to the fore by the impact of the closure of the Strait of Hormuz and the Middle East conflict. Currently, the long-term effect on energy prices, resource allocation, and whether other members will follow suit remains to be seen," Tandy said.
"From a geo-economics perspective, such a move can be seen as reflective of the increasing role of bilateral agreements between nations in place of multilateral engagement," Tandy added.
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