Mixed Reactions As UAE Quits OPEC

Oil industry experts have expressed differing opinions on the United Arab Emirates (UAE) ‘s plan to exit the Organisation of Petroleum Exporting Countries (OPEC), saying it would have little or no impact on the global market structure.

Speaking with our correspondent, Emmanuel Iheanacho, Executive Chairman of Integrated oil and Gas Limited and Genesis Shipping, said that though this is not the first time the country had issued such threats, if it happens, then it may distort supply volume from the OPEC structure, which could lead to market competition that could drive down crude oil prices.

Iheanacho, the former interior minister, expressed suspicion that the current threat could be driven by pressure from Western nations, which have made considerable efforts to penetrate OPEC and possibly dismantle its political structure.

According to him, OPEC has remained a major factor in keeping oil prices up through its supply disruptions and has used oil as a weapon against the West.

He said it could be a subtle approach in the face of the ongoing conflict to further dismantle the OPEC structure and gain control of the global oil market.

However, in his opinion, Ademola Henry Adigun, oil and gas governance advisor and former team leader of the Facility for Oil Sector Transformation (FOSTER), said the UAE had, over time, sought to diversify away from oil and gas, which is known as the cartel.

Adigun said the UAE’s exit would not have any major impact on the oil market, as it has never been a major producer and has not made significant volume contributions to the organisation.

Oil prices rose on Tuesday after

The United Arab Emirates announced that it will leave OPEC effective May 1, ending its membership in the oil cartel after nearly six decades.

The price reaction follows the news, amid ongoing pessimism about prospects for ending the war between the U.S. and Iran and restoring the flow of commerce through the Strait of Hormuz.

Brent crude oil was up about 3 per cent to more than $111 a barrel, and West Texas Intermediate was up about 3.5 per cent to almost $100 a barrel.

This decision follows a comprehensive review of the UAE’s production policy and its current and future capacity and is based on our national interest and our commitment to contributing effectively to meeting the market’s pressing needs,” the country’s energy ministry said in a statement. The UAE will also exit OPEC+, Bloomberg reported.

Iran had spent weeks preceding the announcement striking the UAE with missiles and drones, and Tehran’s closure of the Strait of Hormuz has choked off much of the country’s oil export capacity.

The UAE said it plans to bring additional production to market after the exit. The UAE’s state-run news agency published a statement committing the country to “act responsibly, bringing additional production to market in a gradual and measured manner, aligned with demand and market conditions”, following its exit. Whether that added supply can actually flow to buyers remains uncertain, given that the Strait of Hormuz remains blockaded.

The UAE was the third-largest oil producer in OPEC, behind Saudi Arabia and Iraq.

Tensions between the UAE and OPEC, particularly Saudi Arabia, predate the Iran conflict. For years, Abu Dhabi’s push to exploit its expanded capacity put it at odds with Saudi Arabia within OPEC, and those clashes had more than once pushed the UAE to the brink of walking away from the group entirely.