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ANALYST REACTIONS: UAE to Leave OPEC and OPEC+ Oil Producer Groups
LONDON, April 28 – The United Arab Emirates said on Tuesday it was quitting OPEC and OPEC+, dealing a heavy blow to the oil exporting groups and their de facto leader, Saudi Arabia, at a time when the Iran war has caused a historic energy shock and unsettled the global economy.
Here are some analyst reactions to the news.
JORGE LEON, ANALYST AT RYSTAD:
“The UAE withdrawal marks a significant shift for OPEC. Alongside Saudi Arabia, it is one of the few members with meaningful spare capacity – the mechanism through which the group exerts market influence.”
“While near-term effects may be muted given ongoing disruptions in the Strait of Hormuz, the longer-term implication is a structurally weaker OPEC. Outside the group, the UAE would have both the incentive and the ability to increase production, raising broader questions about the sustainability of Saudi Arabia’s role as the market’s central stabiliser – and pointing to a potentially more volatile oil market as OPEC’s capacity to smooth supply imbalances diminishes.”
AJAY PARMAR, DIRECTOR OF ENERGY AND REFINING AT ICIS:
“The UAE has been in disagreement with general OPEC policy for quite some time. So it’s not a surprise, but it will certainly have a significant impact in the long term. It also signifies the general drift in the historically strong alliance between the UAE and Saudi Arabia.”
SERGEY VAKULENKO, CARNEGIE RUSSIA EURASIA CENTER, FORMER GAZPROM NEFT EXECUTIVE
“The UAE has been planning to grow oil production by up to 30%, and it would be difficult to do so within the limitations of OPEC and OPEC+.
“Now, is probably the least damaging time to announce it – oil prices are high, and there are genuine shortages because of Hormuz closure. After Hormuz reopens, there will be elevated demand as countries will be replenishing reserves that were drawn down since February, so prices will stay high”.
“Without the UAE, OPEC will be much weaker, other major producers, Iran and Iraq, did not maintain any substantial spare capacity. It was mostly done by UAE and Saudi Arabia.”
(London energy team, editing by Louise Heavens and Andrew Heavens)
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