On Tuesday, the United Arab Emirates announced its exit from OPEC and the wider OPEC+ alliance effective May 1, a move that JP Morgan analysts say could attract more U.S. investment once the Strait of Hormuz crisis ends.
The UAE has long pursued a 5 million barrels‑per‑day (bpd) production target by 2027, a figure that has often put it at odds with fellow OPEC members over quota limits. The decision to leave the cartel is intended to free the country to use its growing spare capacity.
According to the bank, the UAE’s exit would reduce OPEC’s ability to stabilize markets, as the Gulf state accounted for over 11% of the organization’s output last year. With the planned capacity expansion, the UAE could theoretically pump an additional 1.5 million bpd beyond current levels. Meanwhile, the closed Strait of Hormuz has forced shut‑ins that are estimated to cost the region about 10 million bpd in lost production. Barclays noted that the UAE is set to grow its output faster once the crisis is resolved, while Energy Aspects’ Amrita Sen told CNBC that the exit does not alter OPEC’s influence on oil prices, though all Gulf producers are likely to ramp up production when the chokepoint clears.
By Michael Kern for Oilprice.com
