UAE pulls out of OPEC and OPEC+, citing strategic change amid global energy crisis
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The United Arab Emirates said on Tuesday it would withdraw from OPEC and OPEC+, a move that could reshape production strategy as global oil markets grapple with supply constraints and rising demand expectations.
The move frees the UAE from group production quotas, making it even easier to increase production and expand its role in crude, petrochemical and natural gas markets. Officials signed the change with the aim of positioning the country for long-term growth in global electricity demand.
UAE Energy Minister Suhail al-Mazrouei told Reuters the decision followed a “careful review” of the country’s energy strategy and was an “independent national decision” based on long-term economic priorities. He said working outside the group would allow the UAE to better meet future global needs.
“Being an independent country under the group will allow us to be more flexible,” al-Mazrouei said, adding that the move comes at a time when global consumers need a stable supply and reserves are reduced.
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An oil pump jack pumps oil in a field near Calgary, Alberta, Canada on July 21, 2014. (Reuters/Todd Korol/Reuters)
The period also shows the continuing problems of oil flow around the world, especially through the Strait of Hormuz – a key connecting point between Iran and Oman that usually carries one fifth of oil and liquid natural gas exports. Disruptions and security threats in the region have strained supply lines and added volatility to electricity markets.
Meeting at the headquarters of the Organization of the Petroleum Exporting Countries (OPEC) with OPEC members and non-OPEC members in Vienna, Austria on 7 December 2018. (JOE KLAMAR/AFP/Getty Images)
Al-Mazrouei said the UAE did not directly consult with other producers, including Saudi Arabia, before making the decision. He added that the country believes that this step can be done without disrupting the markets too much given the existing constraints.
The exit raises questions about cooperation among OPEC+ producers, who have been relying on production limits to manage global supply and influence prices. The UAE has been a member of the group for a long time.
OPEC Secretary-General Haitham al-Ghais (R) and Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman Al-Saud (2nd L) held a press conference after the 33rd OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC ministers. (Askin Kiyagan/Anadolu Agency via Getty Images/Getty Images)
UAE officials have expressed frustration with regional partners over their response to recent security threats. Anwar Gargash, who is an adviser to the president of the UAE, said that the countries of the Gulf Cooperation Council provide material support but fail politically and militarily.
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“Gulf Cooperation Council countries supported each other in terms of programs, but politically and militarily, I think their position was not the most fragile in history,” Gargash said at a forum on Monday. “I expected this fragile situation in the Arab League and it did not surprise me, but I did not expect it in the (Gulf) Cooperation Council and I am surprised by that.”
UAE travel will be effective from May 1.
Reuters contributed to this report.
