finance
UAE to Exit OPEC Effective Friday, Citing National Interests
The United Arab Emirates announced its withdrawal from OPEC, effective Friday, to pursue unrestricted oil production growth. The move weakens the cartel's market influence, particularly on spare capacity, during ongoing disruptions from the Iran war and closed Strait of Hormuz. Energy experts noted potential long-term bearish effects on oil prices once exports resume.
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The United Arab Emirates will leave the Organization of the Petroleum Exporting Countries effective Friday, removing the cartel's third-largest producer and diminishing its leverage over global oil supplies and prices. The decision follows weeks of attacks by Iran on shipping in the Strait of Hormuz, which has constrained UAE oil exports and closed the passage for most tanker traffic since late February.
UAE Energy Minister Suhail Al Mazrouei stated the exit is a sovereign and strategic choice, timed to minimize disruption to other OPEC members.
The UAE seeks freedom to increase production without OPEC constraints, aiming for a capacity of 5 million barrels per day by 2027. It has faced years of production cuts led by Saudi Arabia to support prices, while members like Iraq and OPEC+ partner Russia exceeded quotas.
The UAE Foreign Ministry spokesperson described the move as focused on national interests. Together, they control most of the world's spare capacity exceeding 4 million barrels per day, used to address supply shocks. Jorge León, head of geopolitical analysis at Rystad Energy, said the departure removes a core pillar of OPEC's market influence, making the group structurally weaker.
David Goldwyn, former State Department special envoy for international energy affairs, noted it weakens Saudi Arabia's hand in disciplining the market, though Riyadh retains substantial capacity.
The announcement comes two months after U.S. and Israeli bombing of Iran on February 28, triggering shut-ins of over 10 million barrels per day across Middle Eastern producers. The closed Strait of Hormuz has blocked nearly a fifth of global oil exports, sending prices soaring and prompting a race for alternative supplies.
John Kilduff, founder of Again Capital, said the UAE's move could prove bearish for prices long-term by reducing producer cohesion during supply gluts. Andy Lipow, president of Lipow Oil Associates, expects the UAE to maximize output once the strait reopens, utilizing reserved capacity.
