UAE to Leave OPEC in Blow to Cartel    04/29 06:02

   The United Arab Emirates said Tuesday it will leave OPEC effective May 1, 
stripping the oil cartel of its third-largest producer and further weakening 
its leverage over global oil supplies and prices.

   DUBAI, United Arab Emirates (AP) -- The United Arab Emirates said Tuesday it 
will leave OPEC effective May 1, stripping the oil cartel of its third-largest 
producer and further weakening its leverage over global oil supplies and prices.

   The UAE's decision had been rumored as a possibility for some time, as it 
pushed back in recent years against OPEC production quotas it felt had been too 
low -- meaning it wasn't able to sell as much oil to the world as it had wanted.

   "Having invested heavily in expanding energy production capacity in recent 
years, the bigger picture is that the UAE has been itching to pump more oil," 
Capital Economics wrote in an analysis. "The ties binding OPEC members together 
have loosened," it said, particularly after Qatar withdrew from the cartel in 
2019.

   Regional politics are also likely at play. The UAE has had increasingly 
frosty relations with Saudi Arabia, OPEC's largest producer, over political and 
economic matters in the Mideast, even after both came under attack by fellow 
OPEC member Iran during the war.

   No immediate impact likely for world oil markets

   The UAE's withdrawal from OPEC won't necessarily have any immediate effects 
in markets. That's because world oil supplies are sharply constrained by the 
war in Iran, which has closed off the Strait of Hormuz, a waterway through 
which one-fifth of global oil supplies -- including much of the UAE's -- is 
transported. On Tuesday, Brent crude, the international benchmark, traded above 
$111 a barrel, or more than 50% above its prewar price.

   OPEC accounts for roughly 40% of the world's oil output, but its market 
power had been waning in recent years as the United States ramped up 
production. While Saudi Arabia had been producing more than 10 million barrels 
of oil a day before the war, the U.S. pumps more than 13 million barrels a day.

   U.S. President Donald Trump has been a steady critic of the cartel during 
his two terms in the White House.

   The UAE, which joined OPEC through its emirate of Abu Dhabi in 1967, had 
been producing around 3.4 million barrels of crude a day just before the 
U.S.-Israeli war with Iran began on Feb. 28. Analysts say it has capacity to 
produce roughly 5 million barrels a day.

   In its announcement on Tuesday, made via its state-run WAM news agency, the 
UAE said it also would leave the wider OPEC+ group, which Russia had led to try 
to stabilize oil prices.

   "This decision reflects the UAE's long-term strategic and economic vision 
and evolving energy profile, including accelerated investment in domestic 
energy production," the UAE said, adding that it would bring "additional 
production to market in a gradual and measured manner, aligned with demand and 
market conditions."

   The UAE's withdrawal removes one of OPEC's few members with the ability to 
quickly increase production, said Jorge Leon, head of geopolitical analysis at 
Rystad Energy.

   "A structurally weaker OPEC, with less spare capacity concentrated within 
the group, will find it increasingly difficult to calibrate supply and 
stabilize prices," he said.

   Saudi Arabia, UAE increasingly at odds

   Saudi Arabia and the UAE increasingly have competed over economic issues and 
regional politics, particularly in the Red Sea area. The two countries had 
jointly fought against Yemen's Iran-backed Houthi rebels in 2015. However, that 
coalition broke down into recriminations in late December, when Saudi Arabia 
bombed what it described as a weapons shipment bound for Yemeni separatists 
backed by the UAE.

   As tensions rose in recent months, Saudi broadcasters long based in Dubai, 
the economic hub of the UAE, have pulled back to the kingdom.

   "This exit of OPEC fits into the UAE need for flexibility with key energy 
consumers as well -- including a future relationship with China and a more 
competitive relationship with Saudi Arabia," said Karen Young, a senior 
research scholar at Columbia University's Center on Global Energy Policy.

   While Saudi Arabia and OPEC had no immediate reaction, Emirati Energy 
Minister Suhail al-Mazrouei insisted his country's decision did not stem from 
any dispute with its Gulf neighbor.

   "We've been working together for years and years. We have the highest 
respect for the Saudis for leading OPEC," al-Mazrouei told CNBC.

   However, the UAE sent its foreign minister rather than its ruler to a Gulf 
Arab leaders' meeting held Tuesday in Jeddah, Saudi Arabia, hosted by Saudi 
Crown Prince Mohammed bin Salman.

   The UAE hosted the United Nations COP28 climate talks in 2023, a conference 
that ended for the first time with a pledge by nearly 200 countries to move 
away from planet-warming fossil fuels. But the UAE still plans to increase its 
production capacity in the coming years, even as it pursues more clean energy 
at home, a move decried by climate activists.

   "The demand for power is going to go up and up and up," U.S. Interior 
Secretary Doug Burgum told an Abu Dhabi oil conference in November. "Today's 
the day to announce that there is no energy transition. There is only energy 
addition."

   He drew widespread applause from his Emirati hosts.