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UAE quits OPEC, prioritizes ‘national interests’

Organization of Petroleum Exporting Countries and its allies, a group known as OPEC+, announced a small production cut for October to bolster oil prices that have recently slid over recession fears. The oil alliance decided to cut production by 100,000 barrels per day in October from its September level. | Wang Zhou/Xinhua
Organization of Petroleum Exporting Countries and its allies, a group known as OPEC+, announced a small production cut for October to bolster oil prices that have recently slid over recession fears. The oil alliance decided to cut production by 100,000 barrels per day in October from its September level. | Wang Zhou/Xinhua
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The United Arab Emirates (UAE) will leave OPEC and OPEC+ on Friday to focus on "national interests," the country announced Tuesday, sending shockwaves through energy markets amid the Middle East war.

The UAE, a top global oil producer, has long chafed at OPEC production quotas. "This decision reflects the UAE's long-term strategic and economic vision and evolving energy profile," the official WAM statement said. "During our time in the organisation, we made significant contributions and even greater sacrifices for the benefit of all. However, the time has come to focus our efforts on what our national interest dictates."

Organization of Petroleum Exporting Countries and its allies, a group known as OPEC+, announced a small production cut for October to bolster oil prices that have recently slid over recession fears. The oil alliance decided to cut production by 100,000 barrels per day in October from its September level. | Wang Zhou/Xinhua
U.S.-iran crisis puts Gulf states in limbo

Analysts said the move could weaken OPEC, dominated by rival Saudi Arabia, and heighten oil market volatility. Gulf shipments are already constrained by Iran’s blockade of the Strait of Hormuz, which carries about a fifth of the world’s oil.

A source close to the UAE energy ministry told AFP that the country did not want to be constrained by quotas once shipping normalizes. Tensions with Saudi Arabia, worsened by rival forces in Yemen, have also strained ties.

Before the war, the UAE was OPEC+’s fourth-largest producer. Jorge Leon of Rystad Energy said the withdrawal allows the UAE to raise production, "raising broader questions about the sustainability of Saudi Arabia's role as the market's central stabiliser -- and pointing to a potentially more volatile oil market."

Jamie Ingram of the Middle East Economic Survey noted OPEC is losing 13% of its production capacity with the UAE’s departure, citing the International Energy Agency.

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