UAE’s withdrawal from OPEC and OPEC+ could lead to higher oil production from member countries and potentially drive global oil prices lower, according to Russian Finance Minister Anton Siluanov.
Siluanov said the UAE’s move would allow it to produce oil up to its full capacity and supply it freely to the market, according to a Reuters report on Wednesday.
Russia, a key OPEC+ member, has been aligning its oil policy with OPEC countries and is widely viewed as the primary beneficiary of the recent surge in global oil prices, driven largely by the ongoing Middle East conflict.
Siluanov warned that if OPEC countries act in an “uncoordinated” manner and maximize oil production after the UAE’s exit, oil prices would likely fall.
However, he highlighted that current oil prices are driven by the blockade of the Strait of Hormuz, and his prediction of an oversupply relates to a future scenario when the passage reopens.
UAE Exit From OPEC Signals Energy Shift
The UAE’s decision to leave OPEC and OPEC+ was announced on Tuesday, reflecting its long-term strategic energy vision, increased domestic energy investment, and commitment to a responsible and forward-looking role in global energy markets.
The UAE, an OPEC member since 1967, has decided to leave the group to focus on expanding its oil production and exports. Energy Minister Suhail Al Mazrouei said that the country wanted to operate without constraints from any group.
Richard Tullis, Natural Resources Analyst, Water Tower Research, in an email to Benzinga, stated that the UAE aims to boost oil production to 5 million barrels per day by 2027 and could increase output of its “low unit cost oil” further later in the decade if global demand supports it.
“For energy investors, the UAE’s move likely helps provide some oil price relief in the medium-term, given the UAE’s goal to significantly increase oil production over the next couple of years and assuming the ability to consistently export its oil,” he added.
Investor Ross Gerber, co-founder of investment firm Gerber Kawasaki, suggested that the UAE’s exit from the consortium signals the end of the manipulated oil market controlled by the Saudis.
Despite the UAE’s exit, West Texas Intermediate (WTI) crude was trading 3.93% to $103.85 a barrel on Wednesday, 8:42 am ET. Meanwhile, Brent was trading 3.86% higher at $115.55 per barrel.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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