The country said it would leave the organizations effective May 1.
The stunning loss of the UAE, a longstanding OPEC member, could create disarray and weaken the group, which has usually sought to show a united front despite internal disagreements over a range of issues from geopolitics to production quotas.
UAE Energy Minister Suhail Mohamed al-Mazrouei told Reuters the decision was taken after a careful look at the regional power’s energy strategies.
Asked whether the UAE consulted with Saudi Arabia, he said the UAE did not raise the issue with any other country.
“This is a policy decision, it has been done after a careful look at current and future policies related to level of production,” said the energy minister.
Mazrouei said that being a country with no obligation under the oil producer group would give the UAE flexibility.
He added that the decision will enable the country to ensure it is “attaining to future requirements of the world” relating to crude products and petrochemicals, as well as gas.
“We took this decision at a time when consumers need our attention. We are facing an unprecedented time when strategic reserves of crude products are being drained to a scary level,” he said.
The energy minister added that Abu Dhabi National Oil Company, the state-owned oil company, was not just a local producer.
“We are an international player producing across the value chain from different parts of the world,” said Mazrouei, adding that the UAE expects the world to demand and need more energy in the future.
OPEC Gulf producers have already been struggling to ship exports through the Strait of Hormuz, a narrow chokepoint between Iran and Oman through which a fifth of the world’s crude oil and liquefied natural gas normally passes, because of Iranian threats and attacks against vessels.
Mazrouei said the move would not have a huge impact on the market because of the situation in the strait.
But the UAE exit from OPEC represents a big win for U.S. President Donald Trump, who has accused the organization of “ripping off the rest of the world” by inflating oil prices.
Trump has also linked U.S. military support for the Gulf with oil prices, saying that while the U.S. defends OPEC members, they “exploit this by imposing high oil prices”.
The move came after the UAE, a regional business hub and one of Washington’s most important allies, criticized fellow Arab states for not doing enough to protect it from numerous Iranian attacks during the war.
Anwar Gargash, the diplomatic adviser for the UAE president, criticized the Arab and Gulf response to the Iranian attacks in a session at the Gulf Influencers Forum on Monday.
“The Gulf Cooperation Council countries supported each other logistically, but politically and militarily, I think their position has been the weakest historically,” Gargash said.
“I expect this weak stance from the Arab League and I am not surprised by it, but I haven’t expected it from the (Gulf) Cooperation Council and I am surprised by it,” he said.
OPEC was formed in 1960 by Iraq, Iran, Kuwait, Saudi Arabia, and Venezuela to stabilize prices and sustain development among its member states.
The organization has since expanded to 13 members. OPEC regularly meets to set oil production targets and coordinate output to help manage global oil prices for the entire group.
OPEC cooperates with a group of non-member oil-producing countries through the OPEC+ framework.
“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,” said Jorge Leon, an analyst at Rystad.
“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 stabilizer – and pointing to a potentially more volatile oil market as OPEC’s capacity to smooth supply imbalances diminishes,” he said.
ICIS’ director of energy and refining Ajay Parmar said the UAE’s decision to leave the groups was not a surprise given that the country 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,” Parmar said.
Sergey Vakulenka of Carnegie Russia Eurasia Center noted that the UAE has been planning to grow oil production by up to 30%, and added that it would be difficult for the country 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,” he said.
“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,” he added.
