The logo of the Organization of the Petroleum Exporting Countries (OPEC) is seen inside its headquarters in Vienna, Austria, December 7, 2018. REUTERS\/Leonhard Foeger<\/p>\n
UAE Quits\u00a0OPEC\u00a0in Major Blow to Global Oil Producers\u2019 Group<\/p>\n
DUBAI, April 28 (Reuters)\u00a0\u2013\u00a0The United Arab Emirates said on Tuesday it was quitting\u00a0OPEC, dealing a heavy blow to the oil producers\u2019 group as an unprecedented energy crisis triggered by\u00a0the<\/p>\n
exposes discord among Gulf nations.<\/p>\n
The loss of the UAE, a longstanding\u00a0OPEC\u00a0member, could weaken the group, which has usually sought to show a united front despite internal disagreements over geopolitics and production quotas.<\/p>\n
UAE Energy Minister Suhail Mohamed al-Mazrouei told Reuters the decision was taken after a careful look at the regional power\u2019s energy strategies.<\/p>\n
Asked whether the UAE consulted with\u00a0OPEC\u2019s de facto leader and regional heavyweight Saudi Arabia, he said the UAE did not raise the issue with any other country.<\/p>\n
\u201cThis is a policy decision, it has been done after a careful look at current and future policies related to level of production,\u201d said the energy minister.<\/p>\n
The UAE\u2019s announcement\u00a0trimmed gains\u00a0in oil prices on Tuesday.<\/p>\n
PRODUCTION CONSTRAINED BY IRAN WAR<\/p>\n
OPEC\u00a0Gulf producers have been struggling to ship exports through the<\/p>\n
, a chokepoint between Iran and Oman through which a fifth of the world\u2019s crude oil and liquefied natural gas normally passes, because of Iranian threats and attacks against vessels.<\/p>\n
Mazrouei said the UAE\u2019s move, in which it will leave\u00a0OPEC\u00a0and\u00a0OPEC+ as of May 1, would not have a huge impact on the market because of the constraints in the strait.<\/p>\n
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia are known collectively as\u00a0OPEC+, and the UAE was their fourth-largest producer. Together they controlled nearly half the world\u2019s oil before the war.<\/p>\n
The International Energy Agency said\u00a0OPEC+ saw its share of global oil output fall to 44% in March from about 48% in February. It is likely to fall further in April as production shut-ins become more pronounced.<\/p>\n
\u201cThis opens the door for the UAE to gain global market share when the geopolitical situation normalizes,\u201d said Monica Malik, chief economist at ADCB.<\/p>\n
The exit should be positive for consumers and the broader global economy, she added.<\/p>\n
The UAE is a regional business and financial hub and one of Washington\u2019s most important allies. It has pursued an\u00a0assertive foreign policy\u00a0and carved its own sphere of influence across the Middle East and Africa.<\/p>\n
The UAE has recently doubled down on its relationships with the United States and Israel, with which it opened ties in the 2020\u00a0Abraham Accords, especially after coming under attack during the Iran war. It views the relationship with Israel as a critical lever for regional influence and a unique channel to Washington.<\/p>\n
The UAE\u2019s exit from\u00a0OPEC\u00a0represents a win for<\/p>\n
U.S. President Donald Trump<\/p>\n
, who in a 2018 address to the U.N. General Assembly accused the organization of \u201cripping off the rest of the world\u201d by inflating oil prices.<\/p>\n
Trump has also linked U.S. military support for the Gulf with oil prices, saying that while the U.S. defends\u00a0OPEC\u00a0members they \u201cexploit this by imposing high oil prices.\u201d<\/p>\n
The UAE\u2019s departure came after Anwar Gargash, the diplomatic adviser for the UAE president, criticized the Arab and Gulf response to recent Iranian attacks in a session at the Gulf Influencers Forum on Monday.<\/p>\n
Some Gulf leaders\u00a0met in person\u00a0on Tuesday in Saudi Arabia, a summit that a Gulf official said aimed to craft a response to the thousands of Iranian missile and drone strikes their nations have faced since the U.S. and Israel launched their war with Iran in late February.<\/p>\n
The UAE\u2019s\u00a0OPEC\u00a0exit also comes as global spare capacity hovers at historically low levels, leaving the oil market increasingly tight.<\/p>\n
Operating outside the producer group allows the UAE to fully leverage its position as a supplier of some of the world\u2019s lowest-cost and lowest-carbon barrels.<\/p>\n
Mazrouei noted the UAE has been a member of\u00a0OPEC\u00a0and\u00a0OPEC+ for a long time, but he said the world would demand more energy, suggesting his country\u2019s move will help meet those needs.<\/p>\n
(Additional reporting by Nayera Abdallah and Yousef Saba; Writing by Michael Georgy; Editing by Aidan Lewis)<\/p>\n