The United Arab Emirates (UAE) has announced it is leaving the Opec and Opec+ groups, after the World Bank warned the war in the Middle East has caused the biggest loss of oil supply on record. According to the BBC, the UAE said its decision would ‘help it meet growing global energy demand in the long term after recent investments to boost its production capacity.’
The UAE’s energy minister said being a country with no obligation under the group would give it more flexibility. It also opens the door to closer cooperation between the UA and the USA.
Despite being Opec’s fourth-biggest producer, the UAE’s decision will not have an immediate impact on pricing or supply, due to the closure of the Strait of Hormuz. However, the country has invested heavily in boosting its production capacity and has wanted for a long time to pump more oil.
David Oxley, chief climate and commodities economist at Capital Economics, told the BBC its departure could lead to lower oil prices but higher volatility on the market in the coming decades. He added that while the UAE is small, the implications could be major if other member states leave, or countries such as Russia and Saudi Arabia decide to ramp up production as a result.
