Amid the ongoing conflict in Iran and increasing pressure on the Strait of Hormuz, the United Arab Emirates has decided to withdraw from the ‘Organization of the Petroleum Exporting Countries’ (OPEC) and ‘OPEC+’ in a major change in its energy policy. Both of these are major inter-governmental organizations that coordinate global petroleum policies.
This decision, which will come into effect from May 1, is being considered a major blow to the alliance of oil producing countries, which is actually led by Saudi Arabia.
This decision indicates weakening coordination among the Gulf countries. This has come at a time when the war has caused huge damage to global markets and there has been a lot of pressure on energy supplies. The biggest concern that perhaps prompted the UAE to take such a decision was the security of the Strait of Hormuz, the world’s most important energy corridor, through which one-fifth of the world’s energy resources pass.
UAE’s exit from the group of oil producing countries could signal a major victory for US President Donald Trump. Trump had earlier accused OPEC of “robbing the rest of the world” by deliberately keeping oil prices high. In a sharp attack, Trump also said that while the US protects OPEC members, they “take advantage of this by keeping oil prices high”.
The decision to withdraw from the group of oil producing countries came after the UAE, which has recently emerged as a global business hub and one of Washington’s most important allies, criticized its fellow Arab countries. UAE alleged that these countries did not take strong steps to protect it from Iranian attacks during the ongoing Middle East war.
UAE’s announcement of leaving OPEC can be a news of relief for India. The reason for this is that after separation from OPEC, this country can increase the supply of crude oil in the market, due to which the global oil prices will fall drastically.
This will also reduce inflation and due to good relations with UAE, it can also help India in getting stable quota of oil.