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TEMPO.CO, Jakarta\u00a0<\/strong>–\u00a0OPEC<\/a>, the global cartel of oil-producing nations,\u00a0operates a quota system that limits how much oil each member can produce.<\/p>\n For years, the\u00a0<\/span>United Arab Emirates<\/a>\u00a0<\/span>(UAE) has clashed with\u00a0<\/span>Saudi Arabia<\/a>, OPEC\u2019s most powerful member, over these quotas. The UAE has invested heavily to expand its oil industry and grow its market share, but OPEC limits have repeatedly held it back.<\/p>\n Energy Minister\u00a0Suhail Al Mazrouei told the\u00a0<\/span>New York Times\u00a0<\/em>on Tuesday: “The world needs more energy. The world needs more resources, and [the] UAE wanted to be unconstrained by any groups.”<\/p>\n The UAE is now betting it can sell more oil once the\u00a0<\/span>Iran war<\/a>\u00a0<\/span>and\u00a0Strait of Hormuz\u00a0<\/span>crisis ends, both in the medium and the longer term.\u00a0Analysts, meanwhile, see the move as a calculated step by a producer ready to act independently.<\/p>\n “Losing a member with 4.8 million barrels per day of capacity,\u00a0and the ambition to produce more, takes a real tool out of the group’s [OPEC] hands,”\u00a0said Jorge Leon, head of geopolitical analysis at\u00a0research consultancy\u00a0Rystad Energy.<\/p>\n “With demand nearing a peak, the calculation for producers with low-cost barrels is changing fast, and waiting your turn inside a quota system starts to look like leaving money on the table.”<\/p>\n The UAE, which joined OPEC in 1967 through Abu Dhabi, will\u00a0<\/span>leave both OPEC<\/a>\u00a0<\/span>and the wider OPEC+ alliance, which includes\u00a0<\/span>Russia<\/a>, on May 1.<\/p>\n The UAE currently produces roughly 3.2 to 3.6 million barrels per day (bpd) under quotas but holds spare capacity of nearly 4.8 million bpd, Reuters news agency reported.\u00a0Plans call for a hike in\u00a0output toward 5 million bpd by next year.<\/p>\n The UAE’s exit removes one of the few OPEC members with meaningful spare oil capacity, leaving Saudi Arabia unable to easily share the burden of output adjustments.<\/p>\n The Gulf Kingdom has traditionally managed oil prices by cutting its own production and enforcing discipline across the group. With the UAE gone, Saudi Arabia will have to rely much more on its own oil production cuts to stabilize prices.<\/p>\n This will make defending oil prices more expensive and less effective for Riyadh. It also weakens the Kingdom’s ability to manage and discipline the wider OPEC group.<\/p>\n David Oxley, chief climate and commodities economist at the London-based Capital Economics research house, called the move “the thin end of the wedge,”\u00a0warning in an analysis its website\u00a0that “the ties binding OPEC members together have loosened.”<\/p>\n Saudi Arabia needs high oil prices \u2014 around $90 (\u20ac77) per barrel \u2014\u00a0to fund government spending and\u00a0<\/span>its ambitious Vision 2030, a set of huge infrastructure projects to cut the Kingdom’s reliance on fossil fuels. These include a $500 billion futuristic city named NEOM.<\/p>\n Every extra barrel the country\u00a0holds back means lost revenue, which hurts the country’s ability to grow its economy.<\/p>\n The exit also exposes longstanding tensions inside OPEC, especially the perception that Saudi Arabia dominates decision-making.<\/p>\n The move also comes at a time when OPEC’s overall influence has been shrinking. The cartel once controlled more than half of global supply; today,\u00a0it commands less than a third.<\/p>\n The UAE’s departure is unlikely to cause major immediate swings in global oil prices, largely because the ongoing disruption in the\u00a0Strait of Hormuz\u00a0already dominates the market.<\/p>\n Much of the region’s\u00a0oil exports remain blocked and the UAE is redirecting about 1.8 million bpd to its Fujairah port on the Gulf of Oman coast\u00a0via a pipeline that is running at maximum capacity. Any additional production the country plans to bring online cannot reach markets right away.<\/p>\n As a result, the announcement had little immediate effect on prices, with\u00a0Brent crude largely unchanged on Tuesday.<\/p>\n “In the short term, I don’t expect it [the exit]\u00a0to have major impacts because what’s happening in the Strait of Hormuz dominates the whole global oil picture in a way that renders this news from OPEC as kind of a minor thing,”\u00a0Jeff Colgan, an expert on OPEC at Brown University, told\u00a0DW.\u00a0<\/em><\/p>\n Once the situation in the Hormuz situation normalizes, the UAE could add several hundred thousand extra barrels per day to the market.\u00a0In the longer term, the exit points to modestly lower and more volatile oil prices.<\/p>\n Some\u00a0<\/span>oil industry<\/a>\u00a0<\/span>analysts say the UAE’s exit adds to longer-running doubts about OPEC’s future cohesion.<\/p>\n “It is possible that we could see the whole organization fall apart,” Colgan told DW<\/em>, adding that he believes Saudi Arabia will likely try to keep the group together as “the key anchor to the whole organization.”<\/p>\n The UAE’s exit does, however,\u00a0highlight\u00a0growing frustrations with OPEC’s quota system and exposes rifts, especially with Riyadh.<\/p>\n OPEC has already been under strain from repeated quota breaches by members such as\u00a0<\/span>Iraq\u00a0and\u00a0<\/span>Nigeria, and from Russia’s inconsistent compliance within OPEC+. The UAE’s departure adds to that sense of fragmentation.<\/p>\n In his analysis for Capital Economics, \u00a0Oxley warned that, in the medium term,\u00a0if other producers with spare capacity “see the UAE successfully gaining flexibility and market share” outside OPEC, “others may follow.”<\/p>\n For now, most members lack the UAE’s production capacity or economic diversification, so a mass exodus is unlikely.<\/p>\n The UAE is not the first OPEC member to leave. Qatar exited in 2019, while Angola, Ecuador, Gabon\u00a0and Indonesia have also departed in recent years, often due to disagreements over quotas.<\/p>\n Read: <\/i><\/b>UAE Quits OPEC in Shock Move Amid Energy Turmoil<\/a><\/strong><\/p>\nHow does the UAE’s exit\u00a0weaken OPEC and Saudi Arabia\u2019s leadership?<\/h2>\n
What does the UAE exit mean for global oil prices?<\/h2>\n
Could the UAE prompt other producers to reconsider OPEC?<\/h2>\n