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Tuesday, May 30, 2023

UAE internally debates exit from OPEC

Emirati officials told the Wall Street Journal that the United Arab Emirates is debating internally over the prospect of leaving OPEC.

The UAE’s decision to exit the oil group, which accounts for nearly 38 percent of world crude output, will weaken the group’s oil-pricing power. Uncertainty over the UAE’s participation in OPEC comes as the rift between the UAE and OPEC’s de facto leader Saudi Arabia over the war in Yemen appears to be widening.

Relations between the two countries have soured over the past year or so, with frequent absences from UAE President Sheikh Mohamed bin Zayed Al Nahyan and Saudi Arabia’s Prince Mohammed who are expected to attend, according to the Wall Street Journal. activity. More importantly, the Wall Street Journal has said.

But the rift actually started as early as mid-2021 OPEC cut production.– The rift at the time threatened the group’s entire production cut plan.Some analysts at the time even suggested that a disagreement between the two OPEC heavyweights could lead to The 2020 oil price war repeats itself.

Another bone of contention is the war in Yemen, where the UAE wants to maintain its influence to secure Red Sea routes, and where Saudi Arabia has been negotiating with Houthi rebels – but without the UAE – hoping to end the war. Meanwhile, the UAE signed a security deal with the Saudi-backed Yemeni government that allows the UAE to intervene in the event of an imminent threat — they are seeking to build military bases and runways in the Mandeb Strait — but according to the Wall Street Journal Saudi officials privately opposed the deal, the report said.

The United Arab Emirates currently produces more than 3 million barrels of crude oil per day, making it OPEC’s third-largest oil producer.

For the oil market, the break of OPEC will give non-OPEC oil producers such as the United States, Canada and Brazil, as well as crude buyers such as China, India and Japan, more market influence.

The UAE has long been rumored to be opposed to OPEC’s plans to slash its crude output under the deal with OPEC+.

By Julianne Geiger for Oilprice.com

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