The Gulf country is the latest to leave the group, which was created to form a united front on oil pricing.
The United Arab Emirates has announced its withdrawal from OPEC and the broader OPEC+ framework, removing a key pillar of one of the energy world’s most influential groups.
The Gulf country, which has capacity of about 4.8 million barrels per day and ample scope to increase production, announced on Tuesday it would leave the organization to focus on “national interests”.
Recommended Stories
list of 3 itemsend of list
This step has been taken at a time when Iran has suffered a historic energy shock due to the US-Israel war.
Here’s a look at the organization’s history and role in the global economy:
When was OPEC established and why?
The Organization of the Petroleum Exporting Countries (OPEC) is a permanent, intergovernmental organization based in Vienna, Austria, whose purpose is to coordinate and unify petroleum policies among member countries.
It was originally created at the Baghdad Conference in September 1960 by five oil-producing states, Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
At the time, global oil markets were dominated by a group of powerful Western oil companies, known as the “Seven Sisters”, who controlled production and set prices.
The overarching objective of the founding countries was to assert sovereignty over their natural resources and ensure fair and stable prices for petroleum producers as well as regular supplies to consuming countries.
OPEC currently has 12 members, which, in addition to the UAE, include: Algeria, Republic of the Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia and Venezuela.
According to a statement issued on Tuesday, the UAE’s withdrawal will be effective from May 1, marking the exit of a member that has contributed to the organization since 1967.
The organization attempts price stability by setting agreed production quotas for the membership, which together control about 30 percent of global supply.
Since 2016, OPEC has also cooperated with Russia, Azerbaijan, Kazakhstan, Bahrain, Brunei, Malaysia, Mexico, Oman, South Sudan and Sudan through its OPEC+ framework, increasing its production to about 41 percent of global supply.
Why did UAE leave OPEC and OPEC+?
Along with Saudi Arabia, the United Arab Emirates is one of the few OPEC members with meaningful spare capacity, allowing the organization to respond to supply shocks.
However, nations with excess capacity may decide to cash in on their reserves rather than use them to adjust the market.
The UAE’s assertive foreign policy approach has gradually alienated it from fellow OPEC members, particularly Saudi Arabia, which disagrees with its stance on Yemen and elsewhere.
Meanwhile, Abu Dhabi is building up its sphere of influence in the Middle East and Africa, and has doubled down on ties with the United States and Israel, with which it opened ties in the 2020 Abraham Accords.
It sees relations with Israel as an important lever for regional influence and a unique channel for Washington, especially after the attack during the Iran War.
UAE is not the first country to leave this organization. Others to withdraw in recent years include Indonesia, Qatar, Ecuador, Angola and Gabon, mainly due to disagreements over output quotas.
