Shaimaa Hefzy

The UAE has decided to withdraw from the Organization of the Petroleum Exporting Countries (OPEC) and OPEC+ starting next May, amid indications of a desire to expand production to meet expected energy demand.

The decision comes amid what could be considered the biggest energy crisis in history, with the Strait of Hormuz—the main waterway for Gulf oil exports—closed since the Iran-Iraq war began in late February. Gulf states rely on oil revenues to fund their budgets and non-oil development projects.

The decision suggests divisions among member states and is expected to weaken OPEC's position, given the size of the UAE, one of the organization's largest oil producers. The UAE has previously disagreed with OPEC's production cuts following the COVID-19 pandemic and the Russian-Ukrainian war.

According to what was reported by the official Emirates News Agency (WAM) on Tuesday, the UAE intends, after leaving OPEC, to "increase production gradually and thoughtfully, in line with demand and market conditions."

OPEC and OPEC+, which comprise the world's leading oil producers and exporters—led by Saudi Arabia in OPEC and Russia alongside Saudi Arabia in OPEC+—impose production ceilings on their members, stating that this is to support the stability of the global oil market. Oil prices have reached record highs since the outbreak of the Iran-Iraq War.

More details

According to WAM, this decision came after a thorough review of the UAE's production policy and its current and future capacity.

“Geopolitical volatility continues in the near term through disturbances in the Arabian Gulf and the Strait of Hormuz, which affect supply dynamics, while the underlying trends indicate continued growth in global energy demand in the medium and long term,” according to WAM.

The UAE said that "the stability of the global energy system depends on the availability of flexible, reliable and affordable supplies," according to WAM.

“It is time to focus efforts on what the UAE’s national interest requires, its commitment to its investment and import partners and market needs, and this is what it will focus on in the future,” according to WAM.

(Prepared by: Shaimaa Hefzy, Edited by: Yasmin Saleh, Contact: zawya.arabic@lseg.com)

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