UAE moves to exit OPEC in setback to oil cartel

The United Arab Emirates is set to substantially ramp up its oil production capacity by quitting the Organization of the Petroleum Exporting Countries and the broader OPEC+ alliance this Friday, making a pivotal shift at a time when the war between the United States and Iran has caused a historic energy shock and roiled the global economy.

The Gulf nation unveiled the unexpected decision on Tuesday, stripping the 65-year-old oil cartel of one of its most influential producers. OPEC and OPEC+ have long regulated global crude markets through coordinated production quotas to balance supply and prices.

Speaking to Aletihad News Center, UAE Minister of Energy and Infrastructure Suhail Mohamed Al Mazrouei said prolonged shipping disruptions in the Strait of Hormuz have depleted global strategic oil reserves, necessitating increased investment and higher output to offset supply shortfalls.

"It has been done after a careful look at current and future policies related to level of production," he said, adding the UAE did not consult other nations on the move.

The UAE first joined OPEC through Abu Dhabi in 1967 and retained its membership after the seven-emirate federation was founded in 1971. Alongside Saudi Arabia and Kuwait, it has long underpinned Middle Eastern crude output, which accounts for roughly 30 percent of global oil supply.

Analysts said the well-timed exit aligns with both domestic policy shifts and turbulent geopolitics, as the UAE seeks to scale up its daily production capacity from 3.4 million barrels to 5 million barrels by 2027.

Bader Mousa al-Saif, an assistant professor at Kuwait University, said the UAE's withdrawal "has been long in the making". "We are approaching a post-oil era, a trend all Gulf states acknowledge, yet they differ on how aggressively to diversify away from oil dependence," he told Al Jazeera.

Ole Hansen, head of commodity strategy at Saxo Bank, echoed the view, saying the UAE had "seized the opportunity to exit OPEC, shedding the production quota straitjacket that for years frustrated the oil-rich nation".

The move came as recent data shows OPEC production fell 27 percent to 20.79 million barrels per day in March after disruptions removed 7.88 million barrels per day from supply, and the UAE has criticized fellow Arab states for not doing enough to protect it during the war.

While the OPEC exit will not immediately resolve the Strait of Hormuz shipping blockade, global oil prices kept climbing on Wednesday. Brent crude June futures settled at $111.78 per barrel, surging over 50 percent above prewar levels.

Michael Brown, senior research strategist at Pepperstone, said the timing was notable. "As the US-Iran conflict drags on and the Strait of Hormuz remains largely impassable, the biggest market constraint lies not in production capacity but maritime shipping," he told Gulf News.

The development also came as leaders from the Gulf Cooperation Council on Tuesday held their first in-person meeting since the war kicked off in late February.

Effective responses

Held in Jeddah, Saudi Arabia, the meeting focused on enhancing intra-Gulf coordination to mitigate war-induced spillover risks, formulate effective responses and safeguard GCC national interests while bolstering regional security and stability, Saudi media Al Arabiya reported.

Although cross-border attacks have eased since the US and Iran reached a ceasefire on April 8, Gulf states remain on high alert over potential renewed hostilities, while the diplomatic efforts to strike a permanent deal have so far yielded no breakthroughs.

The Wall Street Journal reported late on Tuesday that US President Donald Trump had ordered his aides to extend the naval blockade on Iranian ports to ramp up economic pressure on Tehran.

Meanwhile, Iranian army spokesman Amir Akraminia told state TV that "we do not consider the war to be over", saying Tehran had "no trust in America".

Iranian Defense Ministry spokesman Reza Talaei-Nik said Washington "must abandon its illegal and irrational demands". "The US is no longer in a position to dictate policies to sovereign independent nations," he said.