The United Arab Emirates will leave OPEC effective May 1, in a major blow to the oil cartel. In February, the UAE was OPEC’s third-largest producer, behind Saudi Arabia and Iraq.
The UAE has said its decision is not a response to years of Saudi-led production cuts. However, they are now expected to ramp up production, which might have a natural downward pressure on oil prices.
Before February 28, the UAE produced around 3.4 million barrels of crude per day. Analysts estimate it has the capacity to produce roughly 5 million barrels per day. As they say in the AUE “Ihfar ya habibi, ihfar” (drill baby, drill).
A big question is whether the UAE’s departure encourages other members to reconsider abandoning OPEC’s capped-production model. If it does, it could signal a broader sell off in energy markets.
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