#UAE to Exit OPEC on May 1 in Strategic Shift, Minister Says
The United Arab Emirates will leave the Organization of the Petroleum Exporting Countries and the broader OPEC+ alliance on May 1, UAE Energy Minister Suhail Mohamed al-Mazrouei said on Tuesday, in a move he described as a strategic policy decision made after a review of the country's energy strategies.
The announcement comes as an energy crisis linked to the Iran war has reduced the ability of Gulf OPEC members to ship exports, with Iranian threats and attacks on vessels constraining traffic through the Strait of Hormuz.
#Mazrouei Says UAE Acted Alone and Sees Limited Immediate Market Impact
Mazrouei told Reuters in a telephone interview that the UAE had not discussed the decision with any other country before announcing it. "This is a policy decision, it has been done after a careful look at current and future policies related to level of production," he said.
He added that he did not expect significant immediate market impact from the exit because of existing constraints in the Strait of Hormuz, which sits between Iran and Oman and through which approximately a fifth of the world's crude oil and liquefied natural gas normally passes.
Oil prices on international markets trimmed gains following the announcement, according to Reuters.
#Exit Could Free UAE to Raise Output Once Gulf Exports Resume
The UAE's departure from OPEC means it will no longer be bound by the group's production quotas. Mazrouei indicated the UAE expected global energy demand to grow, implying the country intends to position itself to meet that need outside the group's supply management framework.
The exit widens a rift between the UAE and Saudi Arabia, which effectively leads OPEC. The UAE is one of the group's largest producers, and its removal further reduces OPEC+'s share of global output at a point when the alliance is already under pressure from the Hormuz disruptions.
The International Energy Agency said OPEC+'s share of global oil output fell to 44% in March from approximately 48% in February. That share is likely to decline further in April as production shut-ins increase, and again in May once the UAE, the fourth-largest producer in the group, formally departs.
Gulf leaders are meeting to discuss the impact of the Iran war on the region's energy sector, though no outcomes from those discussions have been reported.
The longer-term consequences of the UAE's exit for OPEC's cohesion and pricing influence remain uncertain. Whether the departure prompts further review by other members will depend in part on how the Hormuz situation develops and whether the UAE moves to raise output materially once shipping lanes reopen.