On Tuesday, the United Arab Emirates (UAE) announced it will leave the Organization of the Petroleum Exporting Countries (OPEC) as of May 1. The news is a blow to Saudia Arabia, OPEC’s de facto leader, and threatens to upend the cartel’s longheld control over the production, supply and price of oil flowing from its member countries — accounting for about 80 per cent of known global oil reserves. Here, the Financial Post drills down on what the departure could mean for the group, the region and the world. What is OPEC? OPEC is a coalition of oil-producing countries that coordinates policies and production quotas to influence global oil prices. The group was formed in 1960 by Saudi Arabia, Iran, Iraq, Kuwait and Venezuela to counter the dominance of multinational oil companies and to “exercise permanent sovereignty over their natural resources in the interest of their national development,” according to OPEC’s website. OPEC’s member countries produce around 36 per cent of the world’s oil and hold nearly 80 per cent of proven reserves, according to the organization’s 2025 statistical bulletin. When the UAE withdraws on May 1, OPEC will have 11 member countries: Saudi Arabia, Iraq, Iran, Kuwait, Venezuela, Nigeria, Libya, Algeria, Congo, Gabon and Equatorial Guinea. The UAE is also leaving OPEC+, a broader alliance formed in 2016 that includes OPEC members plus other oil-producing nations (including Russia). When did the UAE join OPEC? The Emirate of Abu Dhabi became an OPEC member in 1967, and the UAE joined as an independent country in 1971. The nation is OPEC’s third-largest producer of crude oil after Saudi Arabia and Iraq. While Saudi Arabia — the group’s top producer with the largest proven reserves — is OPEC’s de-facto leader, the UAE is considered an influential member and shares one advantage with the kingdom that other OPEC countries do not: swing capacity, or the ability to quickly raise or lower output to influence oil prices. When a member leaves, especially a swing producer, that’s a problem for OPEC. “It just weakens the cartel’s ability to control the market, especially at times when there’s too much supply,” said economist Peter Tertzakian, founder and chief executive of Studio.Energy. Why is the UAE leaving OPEC? On Tuesday, the UAE announced via its state-run news agency that its decision to leave both OPEC and OPEC+ reflects its “long-term strategic and economic vision and evolving energy profile, including accelerated investment in domestic energy production.” The UAE has “invested heavily” in expanding production capacity in recent years and is “itching to pump more oil,” Capital Economics Ltd. chief climate and commodities economist David Oxley said in a note. “It ultimately feels that being outside of its OPEC+ ‘obligations’ will give it more ‘flexibility,’” he said. The state-owned Abu Dhabi National Oil Company has said it wants to increase production capacity to five million barrels a day by 2027. In an interview with the New York Times on Tuesday, energy minister Suhail Al Mazrouei said the UAE will remain a “responsible producer.” What does the departure mean for the cartel? “Today’s move fits with our existing view that the ties binding OPEC members together have loosened,” said Oxley. UAE to quit OPEC after 60 years in blow to Saudi ArabiaWhile Canadian airlines cancel flights, profit margins for oilpatch refiners take off While OPEC still has clout, Tertzakian said the group’s influence has been impacted by the United States shale revolution that started about 15 years ago. “Their ability to control the market started to wane as new technology enabled more oil to come to market,” he said. Oil market researcher and Commodity Context founder Rory Johnston said in a social media post that while he expects OPEC to survive, the UAE’s departure is a “massive crack, arguably the biggest in the producer group’s storied history” given the country’s high spare capacity and political influence. “Going forward, OPEC will be an ever more Saudi dominated organization than it was already, and this ups the odds we see further defections,” Johnston said. • Email: jswitzer@postmedia.com