\n<\/p>\n
The United Arab Emirates has quit the Opec oil cartel after 60 years of membership, in a heavy blow to the group and its de facto leader, Saudi Arabia, as global energy markets contend with the biggest supply crisis in history.<\/p>\n
The shock loss of the UAE, Opec\u2019s third-largest oil producer, is expected to weaken the group, which for decades has worked together to use its collective oil production to influence global oil market prices.<\/p>\n
The UAE\u2019s exit from Opec represents a win for Donald Trump, who has previously accused the organisation of \u201cripping off the rest of the world\u201d by artificially inflating oil prices by holding back production.<\/p>\n
Last week Trump confirmed that the US had discussed extending a financial lifeline to the UAE under which the two countries\u2019 central banks could agree to exchange equivalent amounts of each other\u2019s currency should the Middle East crisis deepen.<\/p>\n
The UAE on Tuesday set out a plan to sever its ties to the cartel within days as the market enters the ninth week of the US-Israeli war on Iran \u2013 which has blocked a fifth of the world\u2019s seaborne oil from flowing from Gulf producers through the strait of Hormuz, causing record oil market volatility.<\/p>\n
A statement from the UAE\u2019s energy ministry said leaving Opec would give it greater flexibility to respond to a \u201cnew energy age\u201d in line with its \u201clong-term strategic and economic vision\u201d.<\/p>\n
The UAE joined Opec in 1967 through the Emirate of Abu Dhabi and remained in the organisation when the UAE was formed in 1971. Its departure has laid bare the long-running tensions between the UAE and Saudi Arabia over the group\u2019s approach to oil production limits and geopolitics.<\/p>\n
Saudi ministers have favoured curbs on oil production from the 12-strong alliance to help buoy up the oil market as it recorded three consecutive years of annual losses before the crisis. However, the UAE is understood to have become frustrated with the limits and is expected to pump more oil in the short-term to help fund its plans for a low-carbon future.<\/p>\n
Opec members control about 80% of the world\u2019s proven oil reserves but produce only 40% of global crude to help keep market prices at a level that can support the petrostate economies.<\/p>\n
Five countries were founding members of Opec in 1960 \u2013 Saudi Arabia, Iran, Iraq, Kuwait and Venezuela \u2013 and later it was joined by Algeria, Equatorial Guinea, Gabon, Libya, Nigeria and the Republic of the Congo. The group\u2019s influence has widened in recent years as Opec aligned with 11 oil-producing countries outside the cartel, led by Russia, in what became known as Opec+.<\/p>\n
However, the Middle East conflict has amplified growing geopolitical frustrations between members. Anwar Gargas, the diplomatic adviser for the UAE president, criticised the Arab and Gulf states for not doing enough to protect it from Iranian attacks during the Middle East conflict in a session at the Gulf influencers\u2019 forum on Monday.<\/p>\n
Jorge Le\u00f3n, an analyst at Rystad, said: \u201cThe UAE withdrawal marks a significant shift for Opec. Alongside Saudi Arabia, it is one of the few members with meaningful spare capacity \u2013 the mechanism through which the group exerts market influence.<\/p>\n
\u201cWhile near-term effects may be muted given ongoing disruptions in the strait of Hormuz, the longer-term implication is a structurally weaker Opec.\u201d<\/p>\n
The shift to low-carbon energy is also likely to have played a role in the UAE\u2019s exit. Producers that are able to pump more crude, and can tolerate lower oil prices, are expected to abandon any limits on crude production in favour of monetising their remaining reserves before demand for fossil fuels begin to decline.<\/p>\n
The UAE has a capacity of about 4.8m barrels a day and significant room to increase its output, according to Rystad Energy, meaning it is particularly well positioned to pursue this strategy beyond the limits of the cartel.<\/p>\n
The global oil price has reached as high as $119.50 a barrel since the outbreak of the war in Iran. On Tuesday it rose 3% to about $111. The UAE said it would bring additional production to the global oil market \u201cin a gradual and measured manner, aligned with demand and market conditions\u201d.<\/p>\n
David Oxley, the chief climate and commodities economist at Capital Economics, said: \u201c[The] surprise announcement by the UAE that it will leave Opec+ from 1 May will not have any immediate implications for the global energy market, but it does suggest that global supplies will be higher than would otherwise be the case once the strait of Hormuz reopens.<\/p>\n
\u201c[It] fits with our existing view that the ties binding Opec members together have loosened.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
The United Arab Emirates has quit the Opec oil cartel after 60 years of membership, in a heavy blow to the group and its de facto leader, Saudi Arabia, as global energy markets contend with the biggest supply crisis in history. The shock loss of the UAE, Opec\u2019s third-largest oil producer, is expected to weaken<\/p>\n","protected":false},"author":1,"featured_media":48870,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[10797,268,24359,13449,81,3398,23402,1259],"class_list":{"0":"post-48869","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-cartel","9":"tag-oil","10":"tag-opec","11":"tag-quits","12":"tag-trump","13":"tag-uae","14":"tag-weakened","15":"tag-win"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/48869","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=48869"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/48869\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/48870"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=48869"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=48869"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=48869"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}