The UAE's withdrawal from OPEC came as a shock to the oil industry. What the media is writing

The United Arab Emirates (UAE) has announced its imminent withdrawal from the Organization of Petroleum Exporting Countries (OPEC). After that, they will be able to increase oil production and independently influence pricing. The decision to withdraw was a challenge for Saudi Arabia, which informally heads OPEC. How the world's media react to the UAE's actions is in the Izvestia digest.

Bloomberg: the UAE's withdrawal from OPEC took the cartel by surprise

The UAE's shocking decision to withdraw from OPEC has taken their partners, with whom they have collaborated for six decades, by surprise. Now the cartel will have to fight to maintain its influence in the rapidly changing global oil market. On April 28, officials from other member countries were stunned that long-standing tensions between Abu Dhabi and the group's de facto leader, Saudi Arabia, culminated in the sudden announcement that the third largest producer in OPEC would withdraw from the organization within days.

Now, the closure of the Strait of Hormuz is reducing oil production in the UAE and neighboring Persian Gulf countries, as a result of which the rest of the world is experiencing an acute shortage of supplies, and OPEC quotas are losing their meaning. But once production resumes, the UAE's withdrawal threatens to eventually set the stage for a renewed struggle for market share and future price wars. Officials have already made it clear their intention to increase production.

The Washington Post: The UAE's withdrawal from OPEC will be a blow to Saudi Arabia

The UAE's withdrawal from OPEC, along with a broader group of partners known as OPEC+, could be a blow to price control by the group, which in practice has long been led by Saudi Arabia. The move "reflects the UAE's long-term strategic and economic vision, as well as its changing energy profile," according to an official statement released by the UAE state news agency. Rumors about the possible departure of the UAE have been circulating for many years, and the country has also had disagreements with Saudi Arabia over oil production quotas.

Tensions between Saudi Arabia and the UAE reached a fever pitch this year after UAE-backed separatists recaptured vast areas of Yemen from the internationally recognized government. The area was later recaptured by Saudi-backed forces, but the incident dealt a blow to Saudi-Emirati relations. The UAE is the third largest oil producer in OPEC after Iraq and Saudi Arabia. In recent years, cartel members have produced about a third of the world's oil.

Associated Press: Asian stock markets rise, oil prices fall after UAE statement

On April 29, Asian stock markets mostly rose despite a fall on Wall Street, while oil prices fell after the United Arab Emirates announced its withdrawal from OPEC, a blow to the powerful oil cartel. South Korea's Kospi index rose 0.3% to 6,657.40, while Hong Kong's Hang Seng added 1.4% to 2,6029.02. The Shanghai composite index was trading 0.3% higher at 4,091.01.

The UAE's withdrawal from OPEC, which is scheduled to take place on May 1, is being closely monitored by oil markets. OPEC accounts for approximately 40% of global oil production, and the UAE is one of the largest oil producers in OPEC. In recent years, the country has opposed OPEC production quotas, seeking to sell more oil to the rest of the world. Nevertheless, according to analysts, the short-term impact on oil prices will continue to depend mainly on the prospects for reopening the Strait of Hormuz.

The Guardian: how the UAE's decision to withdraw from OPEC could change the face of the Middle East

The UAE's decision to withdraw from OPEC is both a political and a business decision that will rekindle the smoldering differences with Saudi Arabia, which had previously been hidden behind their shared hostility towards Iran due to its attacks on the Persian Gulf countries. In the short term, exiting the oil-producing cartel, which the UAE joined in 1967, gives them the freedom to respond quickly to the long-term prospect of limited supplies and maximize profits. However, the UAE has considered this decision before, as tensions between the UAE and Saudi Arabia over oil production quotas have been around for a long time.

Since the beginning of the conflict with Iran, the UAE, the Persian Gulf state that is politically closest to Israel and most hostile to Tehran, has been pushing Saudi Arabia and Qatar to launch joint counteroffensives against Iran. Having failed to create the necessary political coalition, the UAE decided to abandon the economic solidarity of the club of oil-producing countries and act independently. In an effort to diversify, the UAE is much more dependent on the goodwill of the United States than Saudi Arabia. The decision to withdraw from OPEC could consolidate the country's status as Trump's diplomatic favorite, and this will have investment implications for the emirates.

OPEC suffers losses: The UAE has announced its withdrawal from the cartel

The future of the alliance is in doubt

BBC News: Why the UAE's withdrawal from OPEC is an important event

OPEC now plays a smaller role in global oil markets than it did in the 1970s. Its share in the international oil market, which was 85% at the time, now stands at about 50%. Oil is also less important to the global economy than it was in the 1970s. OPEC now has leverage, but not a monopoly. She can't blackmail the whole world. The UAE's actions can be interpreted as a sign of reduced dependence on oil in the modern world, and there are other signs in the current maelstrom of events: China's investments in electrification have helped soften the economic blow from rising oil and gas prices.

The UAE has significant financial resources and a partially diversified economy, including through financial services and tourism. Much will depend on what the new norm will be if and when the fighting in the Persian Gulf stops. When tankers start passing through the strait again without hindrance, or if the UAE redoubles its efforts to build new pipelines, Emirati oil will flow in unprecedented volumes, not limited by OPEC commitments.