![]() President Joe Biden.įor the UAE, which in terms of oil policy is dominated by Abu Dhabi, the shift in OPEC’s approach appears increasingly at odds with its own resource monetization strategy. relations that has sharpened under the administration of U.S. ![]() The price-hawkishness has come alongside increasing support by Riyadh for Russia’s interests and a deterioration of Saudi-U.S. The result within OPEC is a more “price-hawkish” oil market strategy that has favored preemptive production cuts aimed at heading off any potential decline in oil prices. The OPEC+ cartel has embarked on a markedly nonaligned path, with the Saudi leadership balancing its long-running partnership with Washington against an increasingly important working relationship with Russia and strategic ties with China. Abu Dhabi has previously managed to overcome those difficulties and remain supportive of Saudi leadership, even when it meant shouldering a disproportionately large share of the cartel’s collective production cuts.īut since the alliance expanded into OPEC+, bringing Russia (and other participating non-OPEC producers) into the fold in 2016, the UAE’s interests and those of the new Saudi-Russian leadership axis have diverged more sharply. Over the years, the UAE’s national interests have occasionally been at odds with those of other members of the cartel, including those of OPEC’s dominant player, Saudi Arabia. In turn, Abu Dhabi’s influence within OPEC has raised the country’s profile on the international stage. The emirate’s enormous resource base, sophisticated production, and diplomatic skills have rendered it a central player within the cartel ever since. Early entry allowed Abu Dhabi to participate in the 1973 Arab oil embargo and join the spate of oil sector nationalizations that followed. Abu Dhabi joined during OPEC’s formative years, even before the founding of the United Arab Emirates (UAE) in 1971. IntroductionĪbu Dhabi’s membership in the Organization of the Petroleum Exporting Countries (OPEC) has long been part of the emirate’s identity as a wealthy oil state with significant influence in the global economy. Such gains would have to be weighed against the likelihood of fractured relations with neighboring Saudi Arabia and the potential for a damaging price war. Further benefits include prospects for improved relations with the United States. Such a move could bring upward of $50 billion in additional yearly revenues based on current spare capacity and the completion of ongoing capital investment. We find that the UAE’s departure from OPEC would lead to clear short-term gains and the unfettering of the country’s oil production. Overall, the UAE’s status as an ultra-wealthy and diversified economy with sophisticated diplomatic ambitions leaves it increasingly isolated within a producers’ club that, since the 2016 expansion, has become dominated by petrostates with stronger preferences for high oil prices. This paper examines arguments for and against a departure by the UAE from the cartel, which would be the most high-profile departure from the group to date, overshadowing Qatar’s 2019 exit. Since late 2022, aggressive oil production cuts have left the UAE with a disproportionately large quantity of unused oil output capacity, prompting questions about the costs of its OPEC membership. ![]() The United Arab Emirates has exhibited increasing discomfort with the OPEC cartel’s actions in recent years, particularly since 2016 brought Russia into a leadership role alongside Saudi Arabia in the enlarged OPEC+ group.
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