Amid the ongoing conflict in Iran and increasing pressure on the Strait of Hormuz, the UAE has decided to withdraw from the Organization of the Petroleum Exporting Countries (OPEC) and OPEC+—a major change in its energy policy. Both of these are major intergovernmental organizations responsible for coordinating global petroleum policies.
This decision, which will come into effect from May 1, is being considered a major blow to the alliance of oil producing countries; This alliance is actually led by Saudi Arabia. This decision indicates weakening of coordination among the Gulf countries. This step has been taken at a time when the war has caused huge damage to global markets and there is a lot of pressure on energy supplies. The UAE’s main concern—which probably prompted it to take this step—was the security of the Strait of Hormuz; It is the world’s most important energy corridor, through which one-fifth of the world’s energy resources pass.
A victory for Trump
UAE’s withdrawal from the group of oil producing countries could signal a major victory for US President Donald Trump. Trump has previously accused OPEC of “robbing the rest of the world” by deliberately keeping oil prices artificially high. In a sharp attack, Trump also said that while on one hand the US provides protection to OPEC members, on the other they “take advantage of it by keeping oil prices high.”
Rift between UAE and Gulf countries
The decision to pull out of the oil producer bloc comes at a time when the UAE—which has recently emerged as a global trade hub and one of Washington’s most important allies—has drawn criticism from its fellow Arab countries. The UAE alleged that during the ongoing conflict in the Middle East, these countries failed to take strong enough steps to protect it from Iranian attacks.
What effect will this have on India?
UAE’s announcement of withdrawal from OPEC can prove to be a relief news for India. The reason for this is that after withdrawing from OPEC, this country can increase the supply of crude oil in the market, due to which global oil prices can fall rapidly. This will also help control inflation, and—thanks to its strong ties with the UAE—could also help India secure a steady quota of oil.