The United Arab Emirates said on April 28 that it will leave the Organization of the Petroleum Exporting Countries (OPEC). The decision will take effect on May 1. This is a momentous decision that could have wider implications.
The UAE made the announcement via its state-run WAM news agency, Arab News in Saudi Arabia. “This decision reflects the UAE’s long-term strategic and economic vision and evolving energy profile, including accelerated investment in domestic energy production, and reinforces its commitment to a responsible, reliable, and forward-looking role in global energy markets,” the UAE noted.
At Al-Ain media in the UAE, there is a larger explanation of what the UAE is up to. The article asks: Why is the UAE leaving OPEC and OPEC+?
“At a pivotal moment in the process of supporting the stability of global energy markets, the UAE adopted a long-term strategic and economic vision,” the report says.
First, a little bit of history. The Organization of the Petroleum Exporting Countries was founded in 1960 by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela to coordinate oil production. The goal was to gain control over the oil prices, which previously had been dominated by Western companies. Over time, OPEC became a central player in global geopolitics. This was most clear during and after the 1973 oil embargo that followed the 1973 war. The goal of the Arab states was to use oil as leverage, or as a kind of weapon. The group expanded and later partnered with non-members like Russia in the OPEC+ framework.
OPEC has been at the center of controversy before. In 1975, Carlos the Jackal led an attack on an OPEC meeting in Vienna. Gunmen stormed in and took over 60 hostages. Three people were killed. The attackers were provided a plane and flew to Algiers.
In July 1990, Iraqi President Saddam Hussein “openly threatened to use force against Arab oil-exporting nations if they did not curb their excess production, which he said had weakened oil prices and hurt the Iraqi economy,” The New York Times noted. “The Iraqi leader did not mention particular countries by name in his nationally broadcast address today, but his warning was clearly aimed at Kuwait and the United Arab Emirates. In the last few weeks, the Iraqi oil minister, Issam Abdul-Rahim al-Chalaby, has frequently singled out the two Arab nations, which have been producing oil at rates far above the quotas mandated by the Organization of Petroleum Exporting Countries, as the main culprits in the steep fall of oil prices in recent months.”
Al-Ain says, “The decision [to leave OPEC] was based on key factors, most notably the development of the UAE’s energy sector, including accelerating investment in local energy production, and it reinforces its commitment to its role as a responsible and reliable producer that looks to the future of global energy markets.” It comes after a review by the UAE, a review apparently conducted in secret.
The report notes that “geopolitical fluctuations continue in the near term through the disturbances in the Arabian Gulf and the Strait of Hormuz, which affect supply dynamics, as the basic trends indicate continued growth in global energy demand in the medium and long term.”
The UAE has drifted apart from Saudi Arabia over the last year. They used to coordinate policy. For instance, Riyadh led the way in a break with Doha back in 2017. However, Riyadh later made a ceasefire with the Houthis and began to patch things up with Iran in 2023. The UAE and Riyadh didn’t agree on Yemen policy or on Somaliland. Although Saudi Arabia backed the Abraham Accords, it has now grown colder toward Israel. The UAE, by contrast, has stuck with Israel.
Iran lashes out at UAE
The recent war with Iran by the US and Israel has shown that Iran lashed out by targeting the UAE more than the other states. “The UAE has invested to meet the changing demands efficiently and responsibly, giving priority to supply stability, cost, and sustainability,” Al-Ain notes. The UAE notes that they joined OPEC in 1967 via the Emirate of Abu Dhabi and formalized the relationship when the UAE was founded in 1971.
“The UAE affirms its appreciation for the efforts of both OPEC and the OPEC+ alliance, as the country’s presence in the organization has made significant contributions and even greater sacrifices for the benefit of all. However, it is now time to focus efforts on what the UAE’s national interest requires, its commitment to its investment and importing partners, and the needs of the market, and this is what it will focus on in the future,” Al-Ain noted.
The UAE speaks a lot about flexibility and also about the issue of being a “reliable, cost-competitive, and low-carbon-intensity oil producer globally, contributing to global growth and emissions reduction.” The UAE will continue to act responsibly, it says. The report says that this “decision does not change the UAE’s commitment to the stability of global markets or its approach based on cooperation with producers and consumers, but rather enhances its ability to respond to changing market demands.”
Al-Ain goes on to note that Suhail bin Mohammed Al Mazrouei, the UAE Energy and Infrastructure Minister, pointed out that the Abu Dhabi National Oil Company (ADNOC) “today is not just a local producer, but a global company that produces across the value chain from all over the world.”
The world will have an urgent need for more energy, the country believes. This comes “at a time when consumers need greater attention amidst an unprecedented market situation, with strategic reserves of crude oil being depleted to an alarming level,” the report said.
