What Would UAE Leaving OPEC Mean for Oil Markets?
If the United Arab Emirates (UAE) left OPEC, it would not mean a lot for global oil markets immediately, according to Matthew Bey, a senior global analyst at RANE.
“While the UAE is a major player in OPEC and one of the few countries that often has spare capacity, Saudi Arabia remains largely influential and what they do will have a big impact on markets,” Bey told Rigzone.
“The question long-term, however, is whether or not OPEC can adjust to the new paradigm globally where Western countries are actively trying to reduce emissions and shift away from oil and gas. The UAE is perhaps the OPEC member that is trying to be the most aggressive in figuring out how it fits into the new paradigm,” Bey added.
“If the UAE leaves OPEC eventually, it could be a sign that they have assessed that OPEC itself will struggle to adjust to a world focusing on reducing emissions and the UAE’s continued participation in the bloc hinders Abu Dhabi’s own strategy,” Bey went on to state.
Earlier this month, the Wall Street Journal reported that Emirati officials said the U.A.E. is having an internal debate about leaving OPEC. Also in March, Bloomberg noted that the UAE has no plans to leave OPEC, citing officials speaking on condition of anonymity.
Rigzone has contacted the UAE Ministry of Energy and Infrastructure via several avenues on its website, asking if the UAE will leave OPEC. At the time of writing, the ministry has not yet responded to Rigzone.
Bey told Rigzone there has long been rising stress between the UAE and other OPEC members, including Saudi Arabia, and said “this is not the first time that the UAE has considered what it would mean to leave OPEC”.
“The UAE is trying to position itself as a leader in innovative energy areas and wants to use its oil and gas industry to help finance the development of other sectors,” he added.
“They are also investing in an increase in oil production capacity. One fear they probably have is that if they don’t produce more oil now, more will eventually get stranded due to changing consumption patterns and commitments to decarbonize,” Bey continued.
OPEC and the UAE
OPEC describes itself as a permanent, intergovernmental organization. The alliance was created at the Baghdad Conference on September 10–14, 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela, with the UAE joining later in 1967, the organization’s website shows.
Several countries have terminated or suspended their OPEC membership in the past, the OPEC site outlines. Qatar joined in 1961 and terminated its membership in January 2019, Indonesia joined in 1962 and suspended its membership in January 2009, reactivated it in January 2016, and suspended it again in November 2016, Ecuador joined in 1973 and suspended its membership in December 1992, reactivated it in October 2007, and then withdrew its membership effective January 1, 2020, and Gabon joined in 1975 and terminated its membership in January 1995, but rejoined in July 2016, according to the site.
Back in October 2022, OPEC revealed in a statement on its site that the OPEC+ group decided to cut production by two million barrels per day from August 2022 levels at its 33rd meeting, which was held that month. According to a production table accompanying that statement, Saudi Arabia and Russia will take the brunt of this cut at 526,000 barrels per day each, while the UAE will cut by 160,000 barrels per day.
The production table outlines that the UAE’s voluntary production figure from November 2022 to December 2023 is 3.019 million barrels per day.
OPEC+ decided to keep production steady at its 34th meeting. The group’s next meeting is currently scheduled to take place in June.
According to OPEC’s Annual Statistical Bulletin, the UAE produced 2.718 barrels of crude oil, had a marketed production of 54.4 billion cubic meters of natural gas, and registered a petroleum export value of $54.5 billion in 2021.
SOURCE – RIGZONE