Could the UAE's exit from Opec lead to its split-up as an oil cartel? The odds seem against it

Subscribe to enjoy similar stories.When Yeats wrote his celebrated poem The Second Coming in 1919, the lines “Things fall apart; the centre cannot hold;/Mere anarchy is loosed upon the world” caught the world’s attention, recovering as it was from the wanton violence of World War I. What inspired the poet is contested, but his words are as relevant today as they were a century ago. The senseless Iran war is taking the core of global certainties apart, with much of the globally accepted compact coming unstuck.

A decision by the United Arab Emirates (UAE) to quit Opec—or Organization of the Petroleum Exporting Countries—is among the unforeseen outcomes of this war. Opec is a 66-year-old plurilateral economic club that’s seen to operate like an oil cartel. With its outsized geopolitical influence, it has managed to survive multiple wars and internal squabbles; and, yet, it just took Iran’s extended Hormuz clamp to crack the plaster that held it together.

If it comes apart, it would have profound consequences for geopolitics, petro-dynamics and the global economy, India’s included. The UAE, which was pumping 3.6 million barrels of oil daily before the war, with only 1.8 million able to bypass Hormuz via a pipeline, is among the cartel’s big four. How critical Opec is to the global economy was made clear by its 1973 oil embargo against the US in response to its support for Israel during the Yom Kippur war against Egypt and Syria.

Saudi Arabia, Opec’s unstated chief, and other Gulf nations had weaponized oil sales. It soon turned into a cartel, complete with output quotas, as it began to tighten and loosen supply to get a grip on global crude prices. It made the Gulf states wealthy.