UAE Exits OPEC on May 1

The United Arab Emirates announced Tuesday it will leave OPEC and OPEC+ effective May 1, becoming the latest member to exit the oil cartel amid tensions from the U.S.-Iran war. UAE Energy Minister Suhail Mohamed al-Mazrouei stated the decision followed an extensive review of the country's oil production policy, emphasizing it aligns with national interests.

The UAE, OPEC's third-largest producer behind Saudi Arabia and Iraq, joined the organization in 1967. Multiple sources reported the exit weakens OPEC's influence over global oil supplies and prices, as the UAE has pushed against production quotas it viewed as too restrictive.

The announcement coincides with Brent crude prices climbing 2.7 percent to $111.18 per barrel for June delivery, driven by uncertainty over the Iran conflict. Traders are focusing on July contracts, which rose 2.6 percent to $104.33.

Oil prices have risen from around $70 in late February, nearing peaks of $119 amid fears of prolonged disruption in the Strait of Hormuz, where 20 percent of global oil exports pass. The strait remains effectively closed, trapping tankers in the Persian Gulf.

The Trump administration appeared unlikely to accept Iran's offer to reopen the strait in exchange for lifting the U.S. blockade, with Secretary of State Marco Rubio ruling out postponing nuclear program discussions in a Fox News interview. U.S. gasoline prices reached $4.18 per gallon on Tuesday, the highest since 2022, according to AAA.

Chevron CEO Mike Wirth said in a Sunday interview that upward pressure on oil prices from the conflict is likely to continue, as significant supply has been removed from the system. The war has entered its second full month.

and Corporate Earnings Wall

Street's rally halted Tuesday, with the S&P 500 falling 0.6 percent from its all-time high, dragged by slumping AI stocks. Nvidia sank 2.5 percent, Broadcom dropped 4.8 percent, and Micron Technology fell 4.3 percent, following a Wall Street Journal report on concerns at OpenAI about supporting massive data center spending after missing user and revenue targets.

The Nasdaq composite declined 1.1 percent, while the Dow Jones rose 0.1 percent. Energy companies benefited from higher prices. BP reported profits more than doubling, beating expectations due to the Iran war's impact on oil prices. JetBlue Airways announced moves to cut flying and rein in fuel costs after reporting a worse-than-expected loss, though its stock rose 2.3 percent as CEO Joanna Geraghty noted strengthening customer demand.

In bond markets, the 10-year Treasury yield rose slightly to 4.36 percent after a report showed improved U.S. consumer confidence in April. The Federal Reserve is set to announce its interest rate decision Wednesday, with expectations it will hold rates steady amid inflation risks from high oil prices and tariffs.

The UAE's departure reflects long-standing frustrations with OPEC quotas, exacerbated by differing fiscal needs compared to Saudi Arabia. The UAE has a lower fiscal breakeven oil price of $49 per barrel versus Saudi Arabia's $90, according to 2025 IMF estimates, due to economic diversification.

Diplomatic adviser Anwar Gargash criticized the Gulf Cooperation Council's weak stance on Iranian attacks during a Monday forum. Global markets showed mixed responses, with Europe's indexes varying and Asia's falling, including a 1 percent drop in Japan's Nikkei 225 after the Bank of Japan kept rates unchanged, citing Middle East risks.

The Australian sharemarket futures pointed to a 0.4 percent decline at open, following a 0.6 percent loss Tuesday. The Australian dollar traded at 71.85 U.S. cents. The exit could signal a broader Middle East energy realignment, with some sources noting it has little immediate impact on current blockades but may change post-war dynamics.

UAE officials denied discussing the move with Saudi Arabia or others. In related developments, the Senate Banking Committee is scheduled to vote Wednesday on confirming Kevin Warsh as Federal Reserve chair to succeed Jerome Powell.