There are top level discussions within the polity of the United Arab Emirates about the prospects of leaving the Organization of Petroleum Exporting Countries [OPEC].
Made up of seven emirates – Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al-Khaimah, Sharjah and Umm Al-Quwain, the UAE joined OPEC in 1967.
Whereas OPEC accounts for nearly 38% of world’s total crude oil production, observers believe that the decision of the UAE to quit the group will hurt the group’s capacity to control activities and price-setting powers in the sector.
Wall Street Journal [WSJ] said yesterday that there is uncertainty regarding the UAE’s participation in the Organization of Petroleum Exporting Countries, considered that the rift between UAE and OPEC’s de facto leader Saudi Arabia appears to be widening over the war in Yemen.
Over the last year or so, the WSJ reported, relations between the two have soured, with UAE’s President Sheikh Mohammed bin Zayed al Nahyan and Saudi Arabia’s Prince Mohammed often missing events where the other was expected to be in attendance. What’s more, the WSJ has said.
The rift actually began before that, in mid-2021, over the OPEC production cuts.—a rift that, at the time, threatened to sink the group’s entire plan for its production cuts, WSJ said a report.
Some analysts at the time even believed that the disagreement between the two OPEC heavyweights could lead to a repeat of the 2020 oil price war.
Another bone of contention is the war in Yemen, where the UAE is hoping to keep its influence in the country to secure shipping routes in the Red Sea, while Saudi Arabia has been having talks with Houthi rebels – without the UAE – in hopes of ending the war.
Meanwhile, the UAE has signed a security agreement with the Saudi-backed Yemeni government that allows the UAE to intervene if there is an imminent threat—and they’re looking to build a military base and runway in the Bab al-Mandeb strait—but, according to the WSJ, Saudi officials have privately objected to this agreement.
The United Arab Emirates is currently producing more than 3 million barrels of crude oil per day, and is OPEC’s third most prolific producer.
Analysts say an OPEC fracture would give more market clout to non-OPEC producers such as the United States, Canada, and Brazil – and crude oil purchasers such as China, India, and Japan.
The UAE has long been rumored to be in opposition to OPEC’s plans to drastically cut its crude oil production as part of its agreement with OPEC+.