China Securities Co., Ltd.: How do you view the UAE's withdrawal from OPEC?

On April 28th, the United Arab Emirates announced that it would withdraw from OPEC and OPEC+ starting on May 1, 2026. How should we view the impact of this event? 1. Overview of key member changes in OPEC and OPEC+ Historically, there have been instances of new members joining and existing members leaving OPEC. The table below shows important member changes in history. 2. Review of key events and oil price impacts Overall, changes in OPEC membership may cause short-term disruptions to oil prices, but this largely depends on the extent of the impact on crude oil supply. The actual impact of previous events on global oil prices has not been solely due to the exit or entry of a single country or its supply volume, but rather on whether it changes the market's assessment of OPEC's organizational constraints, production discipline, and internal coordination resistance. However, it is worth noting that there has not been a comparable case of a core oil-producing country like the UAE exiting in history. Specifically: Angola Joined in 2007 with no noticeable boost to oil prices, and exited in 2023 raising doubts about OPEC's production capacity. Qatar Exited in early 2019 with a more strategic orientation and minimal impact on oil supply. OPEC+ Establishment/Russia's participation Russia's participation significantly increased global supply control capabilities, leading to short and medium-term price strength. Indonesia Suspended and reactivated membership multiple times with little impact on oil prices. 3. Outlook on the impact of the UAE's exit Reasons for the UAE's exit include restrictions on production capacity, a desire for energy strategy autonomy amidst escalating Middle East conflicts, and significant differences with core OPEC member Saudi Arabia. The potential impact on oil prices depends on the UAE's release of production, doubts about OPEC+ supply discipline, and possible restructuring of the existing OPEC+ framework. In the short term, the closure of the Strait of Hormuz remains a key market concern, limiting the downward pressure on oil prices from the UAE's exit. In the medium term, attention will be on the UAE's actual production increase and potential adjustments to OPEC+ production strategies. Long-term implications include the reshaping of global dynamics and a possible decline in OPEC+'s bargaining power. In conclusion, the UAE's exit from OPEC may have significant implications for global oil markets, depending on various factors such as production capacity changes, market reactions, and OPEC+'s future direction.