The Washington Post: The UAE's withdrawal from OPEC is a blow to Saudi Arabia and the unity of the Gulf
Russian Finance Minister Anton Siluanov said on Wednesday (April 29) that the UAE's decision to withdraw from OPEC will push oil-producing countries to increase their production, which will lower global prices in the future.
The Russian minister's statement is the first official comment from Moscow on the UAE's decision to withdraw from OPEC, in a move that observers described as potentially redrawing the map of oil alliances and global market balances, and although Russia is not a member of OPEC, it has been a pivotal partner in the "OPEC+" alliance since 2016, and it has close ties with both the UAE and Saudi Arabia, which makes its position on this development an indication of how the alliance will react to a new phase of uncertainty.
Siluanov said that the UAE's exit practically means that it will be freed from the constraints of production quotas, which allows it to pump larger quantities according to its production capacity, explaining that this shift, if accompanied by uncoordinated policies within OPEC, will lead to an abundance of global supply, and consequently to downward pressure on prices.
The Russian minister linked current price levels to the Strait of Hormuz crisis, noting that prices are currently supported by supply disruptions, and that the surplus forecast will become clear once the waterway through which about 20% of the global oil and liquefied gas trade passes.
Reactive Markets: Limited Pullback After 7 Bullish Sessions
Oil prices fell slightly on Wednesday, with Brent crude falling to $111.25 a barrel, while the most active July contract fell to $104.12.
Analysts believe that the decline reflects investors' reassessment of the UAE's decision, as its release from production quotas is expected to boost supply in the future, stressing that this impact will not be immediate due to the continued blockade of the Strait of Hormuz, which keeps the market in a state of tension between two contradictory factors: supply disruptions on the one hand, and the prospects of increased production on the other.
Data from the American Petroleum Institute also showed a decline in U.S. crude inventories by 1.79 million barrels, and a significant decline in gasoline and distillate inventories, reinforcing pressure on the market in the near term.
The Washington Post: A move that shakes the unity of the Gulf and the balances of OPEC
The U.S. newspaper The Washington Post considered the UAE's withdrawal to be a blow to Gulf unity and to OPEC's traditional ability — led by Saudi Arabia — to control prices.
The newspaper linked the decision to the escalation of regional tensions, especially the Iranian war and the near-complete closure of the Strait of Hormuz, in addition to previous disputes between Riyadh and Abu Dhabi over production quotas within OPEC+.
The UAE, which joined OPEC in 1971, becomes the second Gulf country to leave the organization after Qatar in 2019, leaving only 11 core members, and according to OPEC figures, the UAE is the group's third-largest producer after Saudi Arabia and Iraq.
Tensions between Saudi Arabia and the UAE reached a peak this year after UAE-backed separatists took control of large swathes of Yemen from the internationally recognized government, noting that although Saudi-backed forces later regained those territories, the incident caused a rift in relations between the two countries.
Analysts in Dubai explained that the UAE is less dependent on oil revenues than its neighbors, and that its economy is more diversified thanks to the trade, tourism and transport sectors, considering that the decision to withdraw reflects Abu Dhabi's desire to prioritize the path of economic diversification, including investment in artificial intelligence and advanced technologies, away from the constraints of production quotas that limit its ability to exploit its full production capacity.