UAE Announces Withdrawal from OPEC as Iran War Roils Global Energy Markets
The United Arab Emirates announced it will leave OPEC this week, citing the need for independent energy policy decisions amid the Iran war. The move marks a significant break from the major oil cartel and could trigger other members to follow suit.
UAE Quits OPEC
The United Arab Emirates will withdraw from the Organization of the Petroleum Exporting Countries (OPEC) this week, the UAE's state news agency reports, as the Iran war roils global energy markets.
Why Now?
The UAE took the decision now because the closure of the Strait of Hormuz will limit the impact on the oil market, the country's energy minister told CNN.
Implications for OPEC
Ditching OPEC will give the UAE the ability to scratch the itch to pump more oil, which the consortium had restricted. But long term, the UAE could feasibly pump 1 million more barrels per day by leaving OPEC, meeting about 1% of the world's daily demand. That could persuade other countries to leave. Down the road, a dissolution of OPEC could lower global oil prices – but it could also lead to higher oil price volatility, as the consortium wouldn't be able to act in concert to raise or lower production.
Global Oil Impact
The global oil price climbed above $110 a barrel for the first time in three weeks today, as traders worry that the US and Iran are no closer to a deal to end the war and fully reopen the vital Strait of Hormuz.