DUBAI, United Arab Emirates (AP) — The United Arab Emirates announced Tuesday that it will leave OPEC effective May 1, stripping the oil cartel of one of its largest producers and further weakening its leverage over global oil supplies and prices.
The UAE's decision had been rumored as a possibility for some time, as it pushed back in recent years against OPEC production quotas it felt had been too low — meaning it wasn't able to sell as much oil to the world as it had wanted.
“Having invested heavily in expanding energy production capacity in recent years, the bigger picture is that the UAE has been itching to pump more oil,” Capital Economics wrote in an analysis. “The ties binding OPEC members together have loosened,” it said, particularly after Qatar withdrew from the cartel in 2019.
Regional politics are also likely at play. The UAE has had increasingly frosty relations with Saudi Arabia, OPEC's largest producer, over political and economic matters in the Mideast, even after both came under attack by fellow OPEC member Iran during the war.
The UAE’s withdrawal from OPEC won’t necessarily have any immediate effects in markets. That’s because world oil supplies are sharply constrained by the war in Iran, which has closed off the Strait of Hormuz, a waterway through which one-fifth of global oil supplies — including much of the UAE's — is transported. On Tuesday, Brent crude, the international benchmark, traded above $111 a barrel, or more than 50% above its prewar price.
OPEC's market power had already been waning in recent years as the United States ramped up its production of crude oil. U.S. President Donald Trump has been a steady critic of the cartel during his two terms in the White House.
The UAE had been a longtime member of OPEC, first through its emirate of Abu Dhabi in 1967 and later when the UAE became its own country in 1971. It had been producing around 3.4 million barrels of crude a day just before the United States and Israel launched a war on Iran on Feb. 28.
The UAE made the announcement via its state-run WAM news agency, saying it also would be leaving the wider OPEC+ group as well, which Russia had led in order to try to stabilize oil prices.
“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 said.
“Following its exit, the UAE will continue to act responsibly, bringing additional production to market in a gradual and measured manner, aligned with demand and market conditions,” the country added.
The UAE’s withdrawal removes one of OPEC’s few members with the ability to quickly increase production, the mechanism through which the cartel manages oil prices, said Jorge Leon, head of geopolitical analysis at Rystad Energy.
“A structurally weaker OPEC, with less spare capacity concentrated within the group, will find it increasingly difficult to calibrate supply and stabilize prices," he said. “Losing a member with 4.8 million barrels per day of capacity, and the ambition to produce more, takes a real tool out of the group’s hands.”
Saudi Arabia and the UAE increasingly have competed over economic issues and regional politics, particularly in the Red Sea area. The two countries had jointly fought against Yemen's Iran-backed Houthi rebels in 2015. However, that coalition broke down into recriminations in late December, when Saudi Arabia bombed what it described as a weapons shipment bound for Yemeni separatists backed by the UAE.
Saudi broadcasters long based in Dubai, the economic hub of the UAE, have pulled back to the kingdom in recent months as well as the tensions rose.
“This exit of OPEC fits into the UAE need for flexibility with key energy consumers as well — including a future relationship with China and a more competitive relationship with Saudi Arabia," said Karen Young, a senior research scholar at Columbia University’s Center on Global Energy Policy.
The UAE's push to likely pump and sell more oil also comes after it hosted the United Nations COP28 climate talks in 2023.
Those talks ended with a call by nearly 200 countries to move away from planet-warming fossil fuels — the first time the conference made that crucial pledge. Scientists have called for drastically slashing the world’s emissions by nearly half in the coming years to limit global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) compared with pre-industrial times.
But the UAE as a whole still plans to increase its production capacity of oil to 5 million barrels a day in the coming years as it pursues more clean energy at home, a move decried by climate activists.
“The demand for power is going to go up and up and up,” U.S. Interior Secretary Doug Burgum told an Abu Dhabi oil conference in November. “Today’s the day to announce that there is no energy transition. There is only energy addition.”
He drew widespread applause from his Emirati hosts.
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Associated Press writer David McHugh in Frankfurt, Germany, contributed to this report.
