UAE Exit: OPEC Loses Biggest Member to Date

By abruptly leaving OPEC, the United Arab Emirates are not only signaling that they want to be a more independent actor in the oil trade, they are also breaking with traditional alliances in the Gulf and among oil-producing nations, repositioning themselves among global allies.

The country announced Tuesday that it will leave the Organization of Petroleum Exporting Countries Friday. It is the biggest producer of oil and oil products in OPEC behind Saudi Arabia, Iran and Iraq. Its exit from the organization marks the biggest loss in terms of capacity to it ever, after the exit of Qatar in 2019 and that of Angola in 2023.

In addition to mounting dissatisfaction with OPEC's de-facto leader Saudi Arabia's perceived complacency on the war in Iran, the UAE might also want to use its excess oil producing capacity in the future. Under OPEC rules, production quotas are tight, limiting the Emirates as one of the countries with the biggest excess capacity.

While OPEC functions as a stabilizer for highly globalized oil prices and benefits countries by ensuring higher and more stable oil incomes by controlling supply, the Emirates might feel ready to chart their own course through a potential price crash as its economy has been diversifying, according to the BBC. Qatar's exit seven years ago happened amidst a serious rift with Saudi Arabia, but the move was also read in the context of the country looking for more autonomy in accessing energy markets and as well as global repositioning.