The UAE's exit from OPEC, and its possible impact on global oil prices

📌 Summary:

• UAE announced exit from OPEC and OPEC+ on April 28, effective May 1 — after 50+ years of membership (joined 1967)

• OPEC founded September 1960 (Baghdad) by Iran, Iraq, Kuwait, Saudi Arabia, Venezuela to counter dominance of "Seven Sisters" Western oil companies

• UAE exit drivers: (1) Economic: OPEC quotas constrain UAE's ambitious output expansion and vision of funding economic diversification; (2) Strategic: UAE racing to pump more oil to fund transition to knowledge economy; (3) Geopolitical: West Asia war deepened Saudi-UAE divergence

• UAE plans: Raise production from current levels using advanced tech to maximise output — unrestrained by OPEC quotas

• OPEC impact: UAE's exit weakens OPEC's spare capacity (held mostly by Kuwait, Saudi Arabia, UAE); "global spare capacity" is OPEC's key lever for price control

• India angle: 3rd largest oil importer; imports 85% of crude needs; UAE exit could mean more supply and moderate prices — beneficial for India

• Broader context: Qatar, Ecuador, Angola have also exited OPEC — gradual erosion of the cartel

📌 UPSC Relevance:

• GS3: Energy security, global oil markets, India's import dependence

📌 Prelims Facts:

• OPEC: 13 current members after UAE exit | HQ: Vienna, Austria

• India's crude basket: ~85% imported; Middle East is key source

• UAE's current output: 3.5 million bpd; target 5 million bpd by 2027