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Move announced on May 27 redefines the oil market, as experts point to limited short-term impact and structural risks for OPEC
The departure of the United Arab Emirates from OPEC and OPEC+, announced on May 27, creates a new dynamic in the global oil market and raises questions about future price control.
This move occurs during the conflict involving the United States, Israel, and Iran, which intensifies the energy shock and shifts the market’s attention to logistical issues.
According to analysts interviewed by Reuters, the immediate impact tends to be limited, as the main current concern is the closure of the Strait of Hormuz, which compromises the flow of the commodity.
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Immediate impact is limited, but the situation remains on alert
According to Michael Brown, a strategist at Pepperstone, the announcement does not change the main focus of the market at this time.
He explains that the logistical bottleneck caused by the blockade of the sea route remains the dominant factor in price formation.
Still, Brown points out that the Emirates’ production target, estimated at 5 million barrels per day by 2027, could become more viable outside of OPEC.
As a result, oil prices may normalize more quickly after the conflict ends, depending on the restoration of supply.
OPEC’s capacity may be reduced in the long term
Despite the initial stability, experts warn of relevant structural impacts.
Ole Hansen of Saxo Bank told Reuters that the departure raises doubts about production discipline among member countries.
If other producers prioritize market share instead of following quotas, OPEC’s ability to manage prices could be weakened.
This scenario could alter the global balance, reducing the predictability of the energy sector.
How OPEC’s price control works
Currently, OPEC does not set prices directly on the international market.
Instead, the group works by adjusting the oil supply through production quotas among its members.
When there is an oversupply, production is reduced, which tends to raise prices.
On the other hand, in periods of high demand, production can be increased to curb more intense increases.
This mechanism ensures a balance between supply and demand, being fundamental for market stability.
Emirates have a strategic role in the sector
The United Arab Emirates currently ranks fourth among the world’s largest oil producers.
In addition, the country holds the fifth-largest global reserve of the commodity, which reinforces its relevance in the energy sector.
According to Jorge Leon, an analyst at Rystad, the country has significant spare capacity, an essential element for supply control.
Therefore, its departure represents a significant change in OPEC’s structure, which could become weaker in the long term.
Risk of greater volatility in the global market
Outside the organization, the Emirates will have more freedom to expand their production.
This move could increase market volatility, as it reduces the group’s ability to smooth out imbalances.
Furthermore, Saudi Arabia’s role as the main stabilizer could be pressured, altering the traditional dynamics of the sector.
Decision had been signaled for years
Experts state that the departure did not surprise the market, as disagreements between the Emirates and OPEC were already known.
According to Sergey Vakulenko of the Carnegie Russia Eurasia Center, the country plans to increase its production by up to 30%.
This growth would be difficult to achieve within the limitations imposed by the organization, which reinforces the strategic decision.
Timing of the announcement favors the country
Vakulenko also assesses that the chosen timing reduces immediate negative impacts.
This is because prices are high and there is a real shortage caused by the closure of the Strait of Hormuz.
When the strait is reopened, demand should remain high, driven by the replenishment of stocks consumed since February.
Main OPEC oil producers
Among the group’s largest producers are:
Saudi Arabia with 8.96 million barrels per day, followed by Iraq with 3.86 million and Iran with 3.26 million.
The United Arab Emirates follows with 2.92 million, followed by Kuwait with 2.41 million and Nigeria with 1.35 million.
Next are Libya with 1.14 million, Venezuela with 921 thousand, Algeria with 907 thousand, and Congo with 260 thousand barrels daily.
Gabon produces 224 thousand barrels per day, while Equatorial Guinea records 57 thousand.
Given this scenario, the global oil market may enter a more unstable phase, especially if other producers adopt similar strategies — will OPEC be able to maintain its influence in the face of this new configuration?
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