It is a minor bombshell for the markets: the United Arab Emirates has just announced its departure from the Organization of the Petroleum Exporting Countries (OPEC) and OPEC+, as from Friday May 1.

While not one of the largest members, the Emirates still accounted for between 8% and 10% of OPEC's daily output, with production estimated at 3.5 mbpd.

"This decision serves the national interest and the country's commitment to contributing effectively to meeting urgent market needs amid short-term geopolitical volatility - notably tensions in the Arabian Gulf and the Strait of Hormuz, which are influencing supply dynamics," the Emirate stated.

According to Frédéric Lorec, oil analyst at AlphaValue, interviewed by MarketScreener, the UAE's departure from the organization is primarily due to recurring tensions between the Emirates and Saudi Arabia. "Every OPEC member is subject to a production quota," the analyst explains. "However, in recent years, the Emirates have significantly expanded their infrastructure and felt increasingly constrained by this limit."

By leaving OPEC, the UAE will be able to free itself from the production quotas imposed by the organization. The country had been targeting production of
5 mbpd by 2027 and could reach this level much sooner than expected.

Relatively discreet since the start of the crisis, OPEC had increased its daily production by 206,000 bpd - a move that is primarily symbolic given that its total production is in the region of 27 mbpd.

"The crisis in Iran and its repercussions on the Strait of Hormuz are pushing OPEC members toward an 'every man for himself' logic," the analyst adds.

This geopolitical uncertainty is already being felt in prices, with WTI and Brent up 3.5%, at $100 and $111 per barrel respectively.

For the record, the United Arab Emirates joined OPEC in 1967 via the Emirate of Abu Dhabi and maintained its membership after the federation was formed in 1971. Over this period, the country played an active role in supporting global oil market stability and promoting dialogue between producing nations.