For subscribers
Commentary
Oil markets and prices will not be the same after UAE’s OPEC exit
OPEC loses a major producer and a rule enforcer.
Sign up now: Get ST's newsletters delivered to your inbox
The headquarters of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna. For OPEC, losing the UAE is not a flesh wound, but an amputation.
PHOTO: BLOOMBERG
Commodity cartels that try to control prices have always been fragile. Most have not survived. OPEC has been the great exception – but for how long? The departure of the United Arab Emirates (UAE), announced on April 28 and effective May 1, opens the deepest crack yet in the cartel’s 66-year edifice.
This is not the first exit. Indonesia, Ecuador, Qatar and Angola have all left at various points over the past decade, citing frustration with quotas or shifting national priorities. But those were marginal players. The UAE is OPEC’s third-largest producer, behind only Saudi Arabia and Iraq, and one of a tiny handful of members with spare capacity – the muscle that has historically allowed the cartel to discipline cheaters and manage prices. For OPEC, losing the UAE is not a flesh wound, but an amputation.
