The UAE's withdrawal from OPEC could trigger the entire Organization collapse

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, gave a wide-ranging interview to the Oil and Capital Internet portal about the UAE's withdrawal from OPEC and OPEC+ and the possible consequences of this step for both associations.

Actually, the main question is why did they do this, why is the UAE withdrawing from OPEC and OPEC+?

—Despite the fact that OPEC+ has replaced the more rigid OPEC cartel to manage supply on the global market, unfortunately, it has brought continuing contradictions between its member countries.

Such contradictions have traditionally existed between Saudi Arabia and the United Arab Emirates on the issue of policy, additional, voluntary and mandatory oil production cuts. Plus, they exist between the regimes that control the Emirates and Saudi Arabia — there is personal hostility and political conflict.

And the recent OPEC+ meetings have shown that the UAE insisted on an accelerated recovery of oil production in OPEC+ member countries even before the conflict in the Middle East, while Saudi Arabia opposed this due to the greater dependence of its budget on oil prices.

And how will the UAE's withdrawal from the larger OPEC+ alliance affect the future work of the alliance?

— These prospects are quite alarming. Why? Because, in fact, due to the blocking of the Strait of Hormuz, the entire logic of OPEC +'s functioning is being greatly questioned.

Because now you can declare anything you want: increase production, reduce production, do nothing. These statements will have no impact on the physical oil market until the Strait of Hormuz is unblocked. Therefore, I believe that it is the alliance that is going through a crisis period.

And if the situation in the Strait of Hormuz is not resolved in the near future, this alliance faces a serious strategic crisis that could escalate into its disintegration.