The United Arab Emirates' "withdrawal" shakes the market! Russia quickly stabilizes military morale: no intention of leaving OPEC+

Following the surprise announcement of the United Arab Emirates withdrawing from the Organization of the Petroleum Exporting Countries (OPEC) and the OPEC+ mechanism, and amidst the background of the Middle East war leading to a historic oil supply disruption, questions arise about the future of this alliance. In the midst of this, Russia has expressed its intention to stay in OPEC+. The Kremlin spokesman, Peskov, told local media that Russia has not considered the possibility of leaving its cooperation with OPEC and hopes that the UAE's exit from the organization does not mean the end of the broader OPEC+ alliance. Media reports quoted Peskov as saying, "This is a very important area of cooperation, especially crucial in the current situation - frankly speaking, the energy market is in turmoil." He added that the OPEC+ mechanism helps significantly reduce energy market volatility and stabilize the market. Russia and Saudi Arabia are in fact the co-leaders of OPEC+. A source close to the Russian government said that Russia has no incentive to leave the OPEC+ alliance as it does not see a significant increase in oil production in the short term. With Ukraine increasing attacks on Russian oil infrastructure - from refineries to seaports - Russia's capacity to increase oil production remains limited. In March this year, Russia's crude oil production remained almost flat after three consecutive months of decline, at 9.167 million barrels per day (excluding condensate production), 407,000 barrels per day lower than the level Russia was allowed to produce in March according to its agreement with OPEC and allies. The statement from the Kremlin echoed a statement released by Kazakhstan on Wednesday. Kazakhstan's Ministry of Energy stated that the issue of changing Kazakhstan's participation in the OPEC+ alliance was not on the agenda. Several representatives within the OPEC alliance stated on Tuesday that they have no plans to follow the UAE's exit and do not believe that the UAE's departure will trigger a broader exodus. The UAE's exit may lead to a "decentralized game" era in the global energy market As the third-largest oil-producing country in OPEC, the United Arab Emirates announced on April 28th that it would withdraw from OPEC and OPEC+ mechanisms starting from May 1st, ending its 59-year membership. The UAE stated that this decision reflects its long-term strategic and economic vision, as well as the evolving energy structure, with plans to gradually increase production in the future. In an interview, UAE Energy Minister Suhail Al Mazrouei stated that the UAE's decision to exit OPEC at this time was primarily due to factors such as restrictions on the passage of oil through the Hormuz Strait, and believed that this decision would have limited impact on the global oil market. After the UAE announced its departure from OPEC, international oil prices plummeted sharply before quickly rebounding. This volatility reflects concerns in the market about the declining cohesion of OPEC and uncertainty about the future supply landscape. The UAE's exit is not a sudden decision, but the inevitable result of accumulated contradictions between the country's long-term production capacity demands and the collective decision-making mechanism within OPEC. In recent years, the UAE has been advancing its energy production capacity expansion plan, with the goal of increasing daily oil production to 5 million barrels by 2027. However, OPEC's production quota mechanism has always hindered its ability to release its production capacity. In various OPEC+ meetings, the UAE has repeatedly sought to expand its production quota to match its capacity investments, but has repeatedly clashed with Saudi Arabia, which advocates production limits for price support. This conflict had pushed the UAE to the brink of exit several times, and now it has become a reality. Before the Middle East conflict, the UAE's oil production accounted for 10% to 15% of the total production of OPEC countries. An analysis by a former senior executive of Gazprom, the Russian gas industry company, pointed out that the UAE hopes to increase production by 30%, but this is not possible under the quota restrictions of OPEC and OPEC+. Therefore, by leaving OPEC, the UAE can increase production without being constrained by OPEC quotas. Some analysts point out that against the backdrop of obstacles in the Hormuz Strait, the UAE hopes to free itself from the constraints of OPEC quotas, release idle production capacity, and use the advantage of the Fujairah port, unaffected by the obstacles of the Hormuz Strait, to flexibly adjust production. In fact, the UAE has been actively building pipelines bypassing the Hormuz Strait for many years, in order to better respond to geopolitical risks. For the UAE, making the decision to exit OPEC may help it gain full autonomy in energy production and trade, maximizing its economic growth potential. According to its official statement, after exiting, the UAE no longer needs to bear the obligation of production limits of the organization, and will be able to more flexibly cooperate with global partners and investors, focusing on releasing oil, petrochemical products, and natural gas production capacities, aligning with its long-term economic vision. This move clears institutional barriers to capacity release in the aftermath of Middle East military conflicts. In the long term, the UAE can independently set production policies, avoiding missing market opportunities due to collective decisions of OPEC, while also aiding its state-owned oil company ADNOC in advancing a capital expenditure plan of 550 billion dirhams, promoting the transformation of the energy industry towards low-carbon and diversification, balancing short-term gains with long-term sustainable development. Furthermore, after breaking free from OPEC constraints, the UAE may further expand energy cooperation with non-OPEC countries, reducing dependence on a single cooperation system and increasing its bargaining power in global energy trade. At the same time, the UAE's exit may significantly impact OPEC's influence and the stable operation of the global energy market. As a global core oil-producing country alliance established in 1960, OPEC's core role is to stabilize international oil prices through collective production adjustments, and the exit of the UAE weakens OPEC's ability to regulate production - especially since Saudi Arabia has become the only member country with substantial idle production capacity, reducing OPEC's ability to smooth market supply imbalances and potentially leading to increased volatility in international oil prices in the future. Moreover, some analysts believe that the UAE's exit may be the "beginning of the end for OPEC". Energy industry analyst Sol Cavonik believes that with the UAE's departure, OPEC will not only lose about 15% of its production capacity but also a member country that most adheres to the organization's rules. Other OPEC member countries may follow the UAE's lead in the future, which could reshape the geopolitical landscape in the Middle East and fundamentally reshape the global oil market. If the UAE's exit from OPEC triggers a chain reaction and more dissatisfied oil-producing countries follow suit, OPEC's collective control ability will be further weakened, and the global energy market may enter an era of "decentralized games", with oil price fluctuations becoming more frequent.