UAE exit from OPEC signals closer alignment with US interests, experts say

A new, four-day Reuters/Ipsos poll completed on Monday suggested 34 percent of Americans approve of Trump’s performance in the White House, down from 36 percent in a prior Reuters/Ipsos survey, which was conducted from April 15 to 20.

Trump reiterated his stance that prices will drop with the end of the war.

“The gas will go down. As soon as the war is over, it’ll drop like a rock,” he said on Thursday.

Open to trade

One of the few winners in the current oil squeeze – US oil and gas producers who have enjoyed “unusual profits” since this war began – will likely see some pressure on those profits as and when the UAE supply hits the market, Mazarei added.

Another is the US petrochemical sector, one of the dominant global players, alongside China and Saudi Arabia.

Used in everything from fertilisers, solar panels, clothing, and cosmetics to electric vehicles, electronics, and medicines, petrochemicals are integral to food security, manufacturing, and clean energy and becoming the fastest-growing source of demand for oil, PIIE said in a March report.

The disruption of the oil flows due to the war in Iran has strengthened the US role as it continues to be the largest oil producer.

“The US is in a very advantageous position. The increase in US access to Venezuelan oil will improve the US position further,” Mazarei said.

For now, the UAE’s move is “a future sign and signal – one of openness to trade and interest in helping the world restock,” Ziemba said.

It also comes on the heels of a request for a currency swap line it made to the US last month, which experts have said was a “fundamentally political move”.

“It signals the UAE’s political and economic closeness to the US, and this was a significantly political move,” Mazarei said.

UAE’s exit also opens the door for other OPEC members to follow suit, a scenario that would increase downward pressure on oil prices.

“There is a chance of other countries defecting. But if I had to bet, I’d say OPEC will survive, but in a weaker shape and effectiveness,” Mazarei said.

The one thing Mazarei is keeping an eye on is how the war in Iran will reshape the Gulf Cooperation Council (GCC), the regional alliance comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

“The question is, will the GCC survive?” he said.

Ziemba, too, is watching whether there will be more cooperation or competition in the region after the current conflict.

The UAE’s exit from OPEC “is one of many ways in which countries may be balancing – trying relationships for economic and security arrangements that may suit national interests,” she said, adding that she expects the UAE to be “an important player”, including for their own and regional interests.