United Arab Emirates to quit oil cartel Opec

United Arab Emirates to quit oil cartel Opec10 minutes agoShareSaveAdd as preferred on GoogleNick Edser,Archie MitchellandJonathan Josephs,Business reportersAFP via Getty ImagesThe United Arab Emirates (UAE) is quitting the Opec and Opec+ groups of major oil producing nations next month after nearly 60 years of membership.The UAE said its decision would help it meet growing global energy demand in the long term after recent investments to boost its production capacity. It is seen as a blow to the cartel, with one analyst describing the exit as "the beginning of the end of Opec".The Gulf state's energy minister said being a country with no obligation under the groups would give it more flexibility.The UAE's departure represents a win for US President Donald Trump, who has previously attacked Opec for "ripping off the rest of the world". In January he asked Saudi Arabia and other Opec nations to "bring down the cost of oil" and doubled-down on his threat to use tariffs.It also opens the door for closer ties between the UAE and US. And Saul Kavonic, head of energy research at MST Financial, said it was "the beginning of the end" for the alliance. "With the UAE leaving, Opec loses about 15% of its capacity and one of its most compliant members."What is Opec?Opec was formed in 1960 by five countries - Iran, Iraq, Kuwait, Saudi Arabia and Venezuela - to defend the interests of major oil exporters by coordinating production to ensure steady revenue for its members.The number of countries in the cartel has fluctuated over the years. In addition to the five founding members it also includes Algeria, Equatorial Guinea, Gabon, Libya, Nigeria and the Republic of the Congo.The UAE joined in 1967, and its departure will leave the cartel with 11 members. There are an additional 10 non-Opec members in the wider Opec+ alliance.The UAE's decision came as the World Bank warned the war in the Middle East has caused the biggest loss of oil supply on record. Energy prices will rise by about a quarter on average as a result this year, it said, while it could take six months for shipping through the key Strait of Hormuz to return to pre-war levels. "The poorest people, who spend the highest share of their income on food and fuels, will be hit the hardest," said the World Bank's chief economist Indermit Gill.The UAE's decision to leave Opec will not have an immediate impact on global energy supply, due to the ongoing closure of the Strait of Hormuz, but could lead to a longer-term boost in output.The country has invested heavily in boosting its production capacity and has wanted for a long time to pump more oil, economists said.David Oxley, chief climate and commodities economist at Capital Economics, said its departure could lead to lower oil prices but higher volatility on the market in the coming decades. He added that while the UAE is small, the implications could be major if other member states leave, or countries such as Russia and Saudi Arabia decide to ramp up production as a result.Dr Carole Nakhle, chief executive of Crystol Energy and secretary general of the Arab Energy Club, told the BBC the UAE's decision "has been a long time in the making"."Abu Dhabi has pursued ambitious production capacity growth, yet often felt constrained by group quotas, especially amid uneven compliance by some members," she said. Nakhle added that Iran's actions as an Opec member were likely to have reinforced the UAE's decision. According to the latest figures from…

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