
The UAE’s departure from OPEC may not break the cartel
Subscribe to enjoy similar stories.WHEN THE Organisation of the Petroleum Exporting Countries (OPEC) meets on April 29th, the club will be contemplating the departure of one of its longest-standing members. The United Arab Emirates (UAE), which has been part of the cartel since Abu Dhabi joined in 1967, has announced it will leave on May 1st. The war in Iran and its blockade of the Strait of Hormuz have choked off the region’s energy exports, hammering the UAE and its neighbours in the Gulf.
Now it has driven OPEC’s third-biggest oil exporter to go it alone.In announcing its country’s departure, the UAE’s energy ministry thanked the other members of OPEC for “five decades of co-operation”. But its emollient words belie the fact that tensions in OPEC have been brewing for years.The club imposes output quotas on its members in order to keep prices stable and, preferably, high. In recent years these limits have become a sore point for the UAE in particular, playing into the rivalry between the UAE and Saudi Arabia, the group’s biggest exporter and its de facto enforcer.
At times the Saudis have even tried to punish the UAE by increasing output to drive down prices. The UAE, which produced 3.6m barrels a day (b/d) in February, had around 600,000 b/d of spare production capacity before the war began. It is splashing cash on production infrastructure and new exploration with the aim of increasing its total capacity to 5m b/d by 2027.
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