The United Arab Emirates announces its withdrawal from OPEC

BarcelonaUnited Arab Emirates has announced that they will withdraw from both the Organization of the Petroleum Exporting Countries (OPEC) and the OPEC+ alliance (which includes other oil-exporting members, such as Russia) due to "disturbances in the Persian Gulf and the Strait of Hormuz", according to the country's official news agency. The decision will take effect from May 1 and will allow the country to increase its crude oil production. Within OPEC, the production of each member country is limited by agreements reached within the cartel when the energy and oil ministers of the member states meet. Recently, the closure of the Strait of Hormuz has altered the export volumes of these countries. United Arab Emirates has also been a victim of attacks on its energy infrastructure.

The withdrawal of United Arab Emirates comes after OPEC production fell in March to nearly 8 million barrels per day, which is 27.5% less than what was pumped during February. The organization's objective is to work for the stabilization of the oil marketsthe implementation of the increase will not be possible as long as the war continues and the Strait of Hormuz remains blocked, through which a large part of the oil from the members of the oil cartel exits to the markets.

The United Arab Emirates joined OPEC in 1967 through the emirate of Abu Dhabi and maintained its membership after the country's creation in 1971. "Throughout this period, the country has played an active role in the stability of the global oil market and in fostering dialogue between producing countries," said the Emirati Minister of Defense. The decision comes at a key moment for the countries in the region and amid criticism from Donald Trump, who accuses OPEC of inflating oil prices.

Indeed, oil pumping by OPEC member countries has fallen in the last two months due to the war in Iran and the closure of the Strait of Hormuz. The International Energy Agency (IEA) report for March warned of a drop in oil production in March to 10.1 million barrels per day, with Saudi Arabia, Iraq, Kuwait, and the United Arab Emirates forced to stop their activity. This is the largest drop in history, according to the IEA, which had already warned that the supply loss would be even greater in April.

The IEA, which previously did expect an increase in global demand of 730,000 barrels a day this fiscal year, now expects consumption to contract by about 80,000 barrels a day. The worst moment will occur this second quarter, with an average consumption of 102.1 million barrels. Demand estimates are more pessimistic than those announced yesterday by OPEC.

In fact, at its last meeting in early April, OPEC+ decided to increase its production, a milestone almost impossible to meet due to the war in the Middle East. The alliance agreed to increase its oil production by 206,000 barrels a day starting May 1, precisely when the Emirates will leave the cartel, despite the war in Iran. In fact, the agreement is little more than a symbolic gesture, because the implementation of the increase will not be possible as long as the war continues and the Strait of Hormuz remains blocked, through which a large part of the oil from the members of the oil cartel exits to the markets.