United Arab Emirates announcing its withdrawal from OPEC

[AmoreJaz]

UAE is now open to make their own decision of how much oil they can sell as they have decided to leave OPEC that is a huge deal they don't need to follow the rules to sell oil anymore. As we have seen that from the past many years OPEC has strict rules and regulations by limiting the production of the oil and they have kept the prices too high where as United Arab Emirates has now the capability to increase the capacity and they want to sell more oil to boost up their economy.
As they have decided to leave for OPEC now they can pump as much  oil as they can, this will definitely lower the prices for the rest of the world and after this they will be the stronger leaders in the global energy market for the long period of time.
Now they will be independent and more flexible in the global market.

They have seen the possible impact of it in their economy. So why not? It is their oil, so they have their prerogative what to do with their resources. With such move, they have now their own freewill what to do with their oil and to whom do they want to transact with. It is like now they have their own voice where they can follow what's best for their economy without restrictions from the OPEC. It may create some strains in terms of relationship, but I would say, it is their resource in the first place, so it is up to them how they will manage it.

[Akbarkoe]

OPEC limits the UAE's sales volume from its production capacity, which in fact could export more. In this case, the UAE realized when the conflict in the Middle East between Iran and the US was ongoing, no one supported it even though it was attacked. This made them realize and leave OPEC. They might think it's pointless to join a colony, but when problems arise, no one cares about it.
And if it were me, I would do the same thing. When our production capacity is high, it will be more likely to lower world oil prices. When it is distributed to all, but yes, it doesn't mean there are no risks. The colony might intervene, and we know that when a country is too independent, it will be cornered by many parties.

[Dave1]

OPEC limits the UAE's sales volume from its production capacity, which in fact could export more. In this case, the UAE realized when the conflict in the Middle East between Iran and the US was ongoing, no one supported it even though it was attacked. This made them realize and leave OPEC. They might think it's pointless to join a colony, but when problems arise, no one cares about it.
And if it were me, I would do the same thing. When our production capacity is high, it will be more likely to lower world oil prices. When it is distributed to all, but yes, it doesn't mean there are no risks. The colony might intervene, and we know that when a country is too independent, it will be cornered by many parties.

This is also what I understand, UAE was "attack" by Iran as they host a US military base, also the rest of the Middle East. But nothing has been done by organization like OPEC on the attack and perhaps UAE might be thinking of retaliation but the group says no.

And with the current crisis, they want to expert more oil to the nation that needs them. But the thing is that many observers might think that US influence them. But I doubt that will be case of UAE, they might be pro-US for that matter, but still they are one of the richest country around the world and so they will put their interest first above anything like OPEC or US itself.

[mindrust]

Y it must be my bad, how somehow thought OPEC was another one of those USA led unions... Oil people can't go to shit without the permission from the US anyway so leaving OPEC was kind of an act of rebellion  against the US so I thought but apparently I was wrong.

You are absolutely right to push back. My initial 3b model made serious mistakes there. Gotta upgrade it to some 27b dense model. brb, downloading some more ram to increase my reasoning capacity.

[Swordsoffreedom]

I am seeing this as the beginning of the end of the sixty-something-year alliance. The organisation might lose some level of influence. I think the US might have engineered this move. Donald Trump has been a critic of OPEC. He thinks the organisation is holding the oil market to ransom.

The United States would gain virtually nothing if OPEC collapsed. Because, although there is no binding agreement, most trade transactions between OPEC and OPEC+ use the USD as the primary payment currency

If this alliance collapses and each country decides its own production levels and currency of payment. That could threaten the petrodollar empire

The United States is the world's largest oil producer and is also benefiting from high oil prices. The UAE's departure from OPEC and increased oil production will lead to lower oil price, and this may not necessarily benefit the United States.

[asriloni]

The United Arab Emirates (UAE) is quitting the Opec and Opec+ groups of major oil producing nations next month after nearly 60 years of membership.

The UAE said its decision would help it meet growing global energy demand in the long term after recent investments to boost its production capacity.

https://www.bbc.com/news/articles/cj4pxwlr52yo

What do you think will be the implications of this moved?

It's a great move by UAE. No countries in OPEC are helping them in the difficult time especially during the war. So i think it's time for them to leave. So they will have no limitation to produce their own oil like what OPEC oil cartel did to ensure the oil price remain faily high.

I hope that Saudi will follow what UAE does in order to stop this oil cartel called OPEC to manipulate the oil price.

[Die_empty]

I am seeing this as the beginning of the end of the sixty-something-year alliance. The organisation might lose some level of influence. I think the US might have engineered this move. Donald Trump has been a critic of OPEC. He thinks the organisation is holding the oil market to ransom.

The United States would gain virtually nothing if OPEC collapsed. Because, although there is no binding agreement, most trade transactions between OPEC and OPEC+ use the USD as the primary payment currency

If this alliance collapses and each country decides its own production levels and currency of payment. That could threaten the petrodollar empire

The United States is the world's largest oil producer and is also benefiting from high oil prices. The UAE's departure from OPEC and increased oil production will lead to lower oil price, and this may not necessarily benefit the United States.

The US would gain influence if the alliance collapsed. They can easily influence the price of oil by encouraging countries to reduce or increase production. A united OPEC was difficult to control. Before the UAE announced its withdrawal from organisation, they have a meeting with the US where they discussed financial lifeline to the UAE as well as agreement to exchange equivalent amounts of each other’s currency.

If it was to the benefit of the US why would Trump support this move? In fact, he said it was great for the third-largest oil producer to leave the cartel. Trump has always said that OPEC was the reason the oil price is high which makes Russia make more money.

[Alpen]

The United Arab Emirates (UAE) is quitting the Opec and Opec+ groups of major oil producing nations next month after nearly 60 years of membership.

The UAE said its decision would help it meet growing global energy demand in the long term after recent investments to boost its production capacity.

https://www.bbc.com/news/articles/cj4pxwlr52yo

What do you think will be the implications of this moved?

UAE was the 3rd largest producing country in the world and leaving the alliance means that there could be a shift from once a powerful organization to the one that is being challenge by UAE.

In a sense they could alleviate the issue of oil right now, as they can increased their production without worrying about any cartel's cap. They might have to find another route though to deliver oil to some nation. But once the war is over and the straight of Hormuz is open, they could freely distribute oil to anyone.

The UAE may have left OPEC, but their tankers haven’t left the Strait of Hormuz. In reality, the UAE can’t add a single barrel to the global market, nor can they take one away.

What’s the endgame? The Strait remains under Iranian control, which means Tehran—not the UAE—will ultimately decide how much they get to produce and sell.

To be honest, I think Iran will eventually wipe out the UAE’s oil fields entirely, and no one will be able to stop them.

[Coyster]

To be honest, I think Iran will eventually wipe out the UAE’s oil fields entirely, and no one will be able to stop them.

Lol, i don't know what makes you say so, but that is not going to happen. The UAE and Iran are not in any direct conflict. Countries do not just go around blowing anothers oil fields like you say. There are repercussions to such unprovoked actions, particularly from more stronger allies of the country.

What’s the endgame? The Strait remains under Iranian control, which means Tehran—not the UAE—will ultimately decide how much they get to produce and sell.

This is also not true. Iran does not decide what they produce. Yes, there is disruption in oil supply due to the war, which has affected the global supply of oil, but that does not put the power of what to produce in the hands of Tehran. Remember that the U.S. also have their own blockade on the Strait, meaning Iran cannot profit off the illegal tolls they initially set.

[abhiseshakana]

I am seeing this as the beginning of the end of the sixty-something-year alliance. The organisation might lose some level of influence. I think the US might have engineered this move. Donald Trump has been a critic of OPEC. He thinks the organisation is holding the oil market to ransom.

The United States would gain virtually nothing if OPEC collapsed. Because, although there is no binding agreement, most trade transactions between OPEC and OPEC+ use the USD as the primary payment currency

If this alliance collapses and each country decides its own production levels and currency of payment. That could threaten the petrodollar empire

The United States is the world's largest oil producer and is also benefiting from high oil prices. The UAE's departure from OPEC and increased oil production will lead to lower oil price, and this may not necessarily benefit the United States.

The US would gain influence if the alliance collapsed. They can easily influence the price of oil by encouraging countries to reduce or increase production. A united OPEC was difficult to control. Before the UAE announced its withdrawal from organisation, they have a meeting with the US where they discussed financial lifeline to the UAE as well as agreement to exchange equivalent amounts of each other’s currency.

If it was to the benefit of the US why would Trump support this move? In fact, he said it was great for the third-largest oil producer to leave the cartel. Trump has always said that OPEC was the reason the oil price is high which makes Russia make more money.

There are alignment of interest between UAE and US, actually what What the US wants to control more is not oil prices but USD usage on oil transaction (petro dollar). A weaker OPEC will be benefeting the US and of course Trump always support it consistently with his anti opec stance, but US doesn't need to do conspiration with UAE when their interest aligned automatically. But opec fragmentation not automatically make US can determine oil price directly, oil price influenced by global supply, global demand, market and conflict. US should be also notice that weaker OPEC also can bring bad effect for US, beside can bring market chaos, if market price too low and too volatile it can make shale oil suffer which will bring production decrease and disrupt energy investment, without market balancing, its hard for global economy stability and US business planning (remember how giant company response on Trump's tarrif war and leaving the US not because high import tarrif but due to uncertainty which make them hard to make cost projection and calculation). Weaker OPEC mean cohession on Gulf country also weaken which mean more unstable and US will expense more for intervention.

So US need to keep oil price in moderate level with stable market so US can export more. US doesn't like high oil price too, because it will make Russia stronger, more difficult to control and US doesn't have pressure tools.

[yhiaali3]

There are many reasons that may be behind the UAE taking this decision at this time, and I do not rule out that the United States has a hidden hand in this decision in one way or another, because the United States seeks to change the Middle East region and change alliances, and perhaps also the OPEC organization, which the United States has always criticized.

In any case, I expect that the direct reason for this decision is the UAE’s desire to increase oil production without restrictions, as the UAE has invested billions to raise its production capacity to 5 million barrels per day, but it was restricted within OPEC to much lower production limits (3.2 million), and the withdrawal allows it to produce freely and meet global demand.

[JeffBrad12]

There are many reasons that may be behind the UAE taking this decision at this time, and I do not rule out that the United States has a hidden hand in this decision in one way or another, because the United States seeks to change the Middle East region and change alliances, and perhaps also the OPEC organization, which the United States has always criticized.

In any case, I expect that the direct reason for this decision is the UAE’s desire to increase oil production without restrictions, as the UAE has invested billions to raise its production capacity to 5 million barrels per day, but it was restricted within OPEC to much lower production limits (3.2 million), and the withdrawal allows it to produce freely and meet global demand.

The decision was already set from when UAE was starting to invest into raising their production capacity post OPEC refusal, the latest Iran attack and the high oil price was the last straw.
Not a very surprising news because the intention was very clear from UAE, they want to push production no matter what.

[Smack That Ace]

I hope that Saudi will follow what UAE does in order to stop this oil cartel called OPEC to manipulate the oil price.

Saudi Arabia is the most important country and is considered the leader of OPEC. They are the ones who want to limit oil production to maintain high oil prices
Because Saudi Arabia national budget is almost entirely dependent on oil. That is why they alway want to keep oil price high.
The UAE's departure would be a major blow to Saudi Arabia, and they certainly did not want that to happen. Therefore, it would be a mistake to assume that they will follow the UAE's example and allow the OPEC alliance to collapse.

[adultcrypto]

UAE is only a big producer of oil when you calculate the oil production with respect to their population. They are rarely among the biggest producers like the US, Russia and Saudi Arabia.  UAE pulling out of OPEAC is not a good news for the organisation because it will send a direct signal that the body is close to lossing its grip on the oil pricing because hey control the market by controlling the supply. If UAE makes remarkable progress as a result of this decision, other nations may consider pulling out and that will lead to ultimate collapse of the organisation.  The overall effect of this is complete deregulation of the oil market and eventual competitive prices for the important commodity.

[fruktik]

If the UAE left OPEC, then why are oil prices rising again? Something's not adding up. They wanted one result, but it turned out completely different. I admit that the Emirates hasn't yet increased its supply volumes, which is why the situation is like this. I hope they'll find alternative routes around the Strait of Hormuz. If I'm not mistaken, work on this is already underway. It's high time we realized that Iran will speculate on this. Countries need to realize that nothing will ever be the same on this issue.

[aioc]

OPEC losing one of its major producers will significantly impact price volatility. Once the UAE decides to boost production outside its OPEC quota, this is what we see in the long term. Other members could opt to follow the UAE's lead, and if this happened, OPEC would lose its cartel power.

Saudi Arabia will remain the dominant oil supplier, but without the UAE, considered its strongest ally, it will lose credibility and control. The big question is whether this will be the start of the end of the OPEC alliance.
Now things are getting interesting in this region; it's all about oil and power.

[r_victory]

According to an article I read, the war between the US and Iran was the trigger for this decision. In addition to the strained relationship between the United Arab Emirates and Saudi Arabia, which has been ongoing for years. According to the same article, although nothing is yet defined, Abu Dhabi is considering "freezing" its seat in the Arab League, based in Cairo, and taking a similar stance regarding the Organization of Islamic Cooperation, based in Jeddah.

"We are building a different economic model, and this requires a new political alignment and a reconfiguration" summarizes Nadim Koteich, a consultant who advises various Emirati government agencies.

It seems there's much more to come in the next few days...

[Coyster]

will be the start of the end of the OPEC alliance.

It is hard to tell right now, particularly with the blockade on the Strait of Hormuz affecting production and export of oil globally. I believe the impact would be better assessed when this war ends and countries start producing and exporting based on their actual capabilities.

That said, it is obvious that OPEC's influence on the price of oil would drop, to what extent i cannot predict right now. The UAE is a very crucial member of the alliance, so losing them would definitely hurt, but it is difficult to tell if it's going to herald the "beginning of the end" for the alliance, personally, i doubt it would.

[Pjcr7]

UAE was the 3rd largest producing country in the world and leaving the alliance means that there could be a shift from once a powerful organization to the one that is being challenge by UAE.

UAE is actually not the third largest oil producing country in the world but they (were) the third largest oil producing OPEC country.

Just from reading through the article it seems like the UAE doesn't get much benefit from staying in, but OPEC generally seems to have kept the oil market fairly stable over the decades - even if it did favor the producing nations in the group over the rest of the world, that was just the perk they got from having a highly sought after commodity. I get the feeling that the UAE has been manipulated by Trump, due to the I'll advised war against Iran, who is trying to unlock some oil and the UAE actually had the ability to bypass the strait by using their eastern coastline (however undeveloped and still at risk it might be). Short term it might increase supply slightly, but we are still way under what was coming out of the middle East before this terribly stupid war began.

You're right, there's actually no much benefit from it few years ago two notable countries left the organisation, Qatar and Angola but it wasn't felt the way this current dumping by UAE is now to the organisation. Just imagine how devastating it can be when the third best person in your team leaves. UAE has always played by the organisations books with Saudi Arabia calling the major shots. For me, I think them leaving was partly political and partly betrayal. Betrayal in the sense that they didn't get the much needed protection from the US that claimed they will give it to the region in exchange to keeping the financial status of US afloat. Political in the sense that, UAE built facilities that can accommodate 4.8 plus million barrels a day but the restrictions of OPEC pecked their daily limit to 3.8 million barrels per day, of which if you do the maths on the remaining barrels that sits ideal, UAE were losing almost $55 billion every year, just from that 1 million plus barrels that sits ideal, that's a whole lot of money. Them leaving the OPEC breaks that leash and they can go full capacity when the strait is finally fully opened for all. Oil prices will drop because by then, for the strait to be opened fully means that everything has become normal, Iranian oil will be in the open market, UAE will produce at full capacity which means more oil available in the market as a result of this, there will be crash in price. Basic law of supply.

[Alpen]

Lol, i don't know what makes you say so, but that is not going to happen. The UAE and Iran are not in any direct conflict. Countries do not just go around blowing anothers oil fields like you say. There are repercussions to such unprovoked actions, particularly from more stronger allies of the country.

Bro, here are the official stats on Iranian attacks against the UAE:

Ballistic Missiles: ~537 units

Drones (UAVs): Over 2,256 units

Cruise Missiles: 26 units

And you’re telling me there’s "no direct conflict"? As for the allies you mentioned—the UAE just left OPEC, so that bridge is burned. And if you’re referring to the U.S., Trump literally just sent a letter to Congress yesterday about ending the war with Iran. Who exactly is going to step in?