UAE quits OPEC, likely in a protest over the war. They will be leaving May 1.
Oil fell on this on what’s assuredly an algo-driven move. It’s quickly reversed.
For oil prices for now it’s meaningless, as OPEC will be pumping at full-bore for a long time after the war to rebuild inventories. For what it’s worth, the UAE produces 3.8 million barrels per day and already planned to boost that to 4.1 million barrels and there has even been talk of 5 million barrels. Of course, because of the Strait of Hormuz being closed, they’re essentially exporting zero right now.
The UAE energy minister said the decision to exit OPEC and OPEC+ aligns with accelerating investment in local energy production, as it reinforces the UAE’s commitment to its role as a responsible and reliable producer envisioning the future of global energy markets. The minister told Reuters this is a decision taken after a careful look at our strategies related to the energy field and petroleum sector and others.
A statement from the UAE said the decision points to the “evolution of sector policies to enhance flexibility in responding to market dynamics, while continuing to contribute to market stability in a thoughtful and responsible manner”
They also framed this as something they’ve been considering for some time but this was the time to do it given the state of the global oil market. That makes sense given that the market is going to be undersupplied for awhile and I wonder if OPEC breaks up altogether over this. That’s something the US has wanted for a long time but it should be careful what it wishes for as that will lead to more volatility in oil prices — higher highs and higher lows.
You also have to wonder if this has something to do with the war as the UAE has been among the most-hawkish members.
WTI crude oil is up $4.22 to $100.59 on the day.
