The longstanding member is the third-largest producer in the oil-exporting cartel.
The United Arab Emirates said it is leaving OPEC and the broader alliance.
“This decision follows a comprehensive review of the UAE’s production policy and its current and future capacity and is based on our national interest and our commitment to contributing effectively to meeting the market’s pressing needs,” the UAE energy ministry said in a statement released on April 28.
The decision could be a heavy blow to the oil-exporting institution.
Since joining the group in 1967—seven years after its establishment—Abu Dhabi has become the third-largest oil producer in OPEC, behind Saudi Arabia and Iraq.
The UAE produces between 3 million and 4.5 million barrels of crude per day.
While the UAE did not explicitly state its reason for withdrawing from the 12-member group, the country has been involved in various internal disagreements for years. The loss of the UAE could further sew division within OPEC and weaken the institution.
The nation’s decision to pursue an independent energy policy comes at a time when the world is facing an energy crunch created by the nine-week-old war in Iran.
Gulf producers have been struggling to export oil through the Strait of Hormuz, a narrow waterway situated between Iran and the Arabian Peninsula. This vital chokepoint handles about 20 percent of the world’s crude and liquefied natural gas (LNG) supply, as well as various consumer and business goods, from fertilizer to pharmaceuticals.
Tanker traffic has essentially come to a standstill, and the strait has been at the center of the U.S.–Iran peace negotiations.
OPEC reported that the group’s production in March declined by 7.7 million barrels per day to below 21 million barrels per day. The UAE lost more than 1.5 million barrels of output last month.
“Disruptions to shipping operations in the region raised persistent concerns about regional supply flows, while strong buying of prompt spot market barrels, production cuts, and declarations of force majeure further supported the upward price momentum,” OPEC stated in its Monthly Oil Market Report.
Abu Dhabi’s exit could turn out to be a win for President Donald Trump, too.
By Andrew Moran
