Dubai: The United Arab Emirates said Tuesday it would leave OPEC from 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 had been producing around 3.4 million barrels of crude a day just before the US-Israeli war with Iran began on February 28. Analysts say it has capacity to produce roughly 5 million barrels a day.
The UAE’s decision had been rumoured 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.
Besides, 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.
OPEC’s market power had already been waning in recent years as the United States ramped up its production of crude oil. Saudi Arabia had been pumping over 10 million barrels of oil a day before the war. The US pumps more than 13 million barrels a day.
US President Donald Trump has been a steady critic of the cartel during his two terms in the White House.
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