The United Arab Emirates has announced its decision to withdraw from the Organization of Petroleum Exporting Countries (OPEC) and the OPEC+ coalition. This move is expected to reduce OPEC’s production capacity by approximately 15 percent, potentially having a significant impact on Saudi Arabia. The World Bank has warned that ongoing conflicts in the Middle East could reduce oil supply and cause energy prices to rise by nearly one-quarter.
In a statement issued by the UAE’s official news agency, it was noted, “This decision reflects the UAE’s long-term energy sector strategy and economic outlook.” UAE Energy Minister Suhail Mohammed Al Mazrouei stated that the decision was made after a thorough review of regional energy strategies, adding that no discussions were held with other countries regarding this matter.
The UAE became a member of OPEC in 1967. Following its departure, the number of member countries will decrease to 11. Analysts interpret the UAE’s decision as signaling the “beginning of the end” for OPEC. Shaul Kavonic, a leading energy analyst, commented that “With the UAE’s exit, OPEC will lose roughly 15 percent of its production capacity.”
According to economist Monica Malik, once post-war conditions stabilize, the UAE is likely to increase its share in the global oil market. This could provide some relief to consumers and the global economy. However, Indermit Gill, chief economist at the World Bank, warns that the greatest impact will be felt by impoverished populations who spend a significant portion of their income on food and fuel.
