𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

The United Arab Emirates has announced its departure from the Opec group of oil producers, concluding six decades of membership.

The decision, effective from May 1, was communicated through the state-run WAM news agency and comes amid an energy supply shock in the Middle East, spurred by the US-Israeli war with Iran.

Opec, or the Organisation of Petroleum Exporting Countries, was founded in Iran in 1960 with the primary aim of coordinating production among member nations, stabilising oil markets, and maintaining steady supply and income.

The UAE became a member in 1967.

Its withdrawal will leave the oil cartel with 11 member countries, including Saudi Arabia, Iran, and Iraq.

A statement on the WAM news agency read: “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.

“While near-term volatility, including disruptions in the Arabian Gulf and the Strait of Hormuz, continues to affect supply dynamics, underlying trends point to sustained growth in global energy demand over the medium to long-term.”

The statement went on to say that following its exit, the UAE would “continue to act responsibly, bringing additional production to market in a gradual and measured manner”.

It has been reported that the UAE has expressed frustrations with production quotas agreed by Opec members in a bid to control oil prices, with the decision also referring to a desire for greater flexibility.

But the announcement comes at a fraught time in the Middle East with the closure of the Strait of Hormuz disrupting oil and gas supplies around the world and sending prices soaring.

David Oxley, chief climate and commodities economist for Capital Economics, said the UAE had been “itching to pump more oil”.

“The UAE’s desire to pump more oil has been placated up to now by a combination of the rest of Opec turning a blind eye to its overproduction and also raising its quota levels,” he said.

The economist suggested that, if energy flows get back to normal once the Strait of Hormuz reopens, then the UAE’s departure from Opec could “feasibly” result in it pumping an additional one million barrels per day – the equivalent of about 1% of global oil demand.

Mr Oxley also warned that the move could trigger other members leaving Opec which would have bigger implications for the global oil market and prices.