DUBAI, United Arab Emirates (AP) — The United Arab Emirates said Tuesday it will leave OPEC effective May 1, stripping the oil cartel of its third-largest producer and further weakening its leverage over global oil supplies and prices.

The UAE's decision had been rumored as a possibility for some time, as it pushed back in recent years against OPEC production quotas it felt had been too low — meaning it wasn't able to sell as much oil to the world as it had wanted.

“Having invested heavily in expanding energy production capacity in recent years, the bigger picture is that the UAE has been itching to pump more oil,” Capital Economics wrote in an analysis. “The ties binding OPEC members together have loosened,” it said, particularly after Qatar withdrew from the cartel in 2019.

Regional politics are also likely at play. The UAE has had increasingly frosty relations with Saudi Arabia, OPEC's largest producer, over political and economic matters in the Mideast, even after both came under attack by fellow OPEC member Iran during the war.

No immediate impact likely for world oil markets

The UAE’s withdrawal from OPEC won’t necessarily have any immediate effects in markets. That’s because world oil supplies are sharply constrained by the war in Iran, which has closed off the Strait of Hormuz, a waterway through which one-fifth of global oil supplies — including much of the UAE's — is transported. On Tuesday, Brent crude, the international benchmark, traded above $111 a barrel, or more than 50% above its prewar price.

OPEC accounts for roughly 40% of the world's oil output, but its market power had been waning in recent years as the United States ramped up production. While Saudi Arabia had been producing more than 10 million barrels of oil a day before the war, the U.S. pumps more than 13 million barrels a day.

U.S. President Donald Trump has been a steady critic of the cartel during his two terms in the White House.

The UAE, which joined OPEC through its emirate of Abu Dhabi in 1967, had been producing around 3.4 million barrels of crude a day just before the U.S.-Israeli war with Iran began on Feb. 28. Analysts say it has capacity to produce roughly 5 million barrels a day.

In its announcement on Tuesday, made via its state-run WAM news agency, the UAE said it also would leave the wider OPEC+ group, which Russia had led to try to stabilize oil prices.

Source: WPLG