Beginning May 1, the United Arab Emirates (UAE) will no longer be part of the Organisation of Petroleum Exporting Countries (OPEC) and the broader OPEC+ alliance. The UAE’s exit, announced Tuesday, comes at a time when global oil markets have been roiled by the war.It may not, however, have been directly influenced by the war alone, says Ajay Singh, an energy and shipping executive based in Tokyo. Singh, who is a former Shell and Japan Petroleum Corporation executive with considerable experience of West Asia, tells Anil Sasi that the decision signals a break from its Gulf neighbours, particularly Saudi Arabia, geopolitically. Edited Excerpts:Does the decision by the UAE to leave OPEC and OPEC+ have to do with the Iran war?I believe it is a strategic decision, not directly related to the war. There has been disagreement for several years between the UAE and other OPEC and OPEC+ members, particularly Saudi Arabia, which favoured curtailment of production in order to keep oil prices up. The UAE was limited to producing only two-thirds of its capacity, much against its wishes. The timing of the decision seems a bit curious since the matter of production curtailment is in abeyance for now, with production severely cut anyway due to the blockade of the Strait of Hormuz. One would have also expected a show of unity among the Arab Gulf Cooperation Council (GCC) countries at this time, when they have all faced attacks from Iran. Nevertheless, the UAE concluded that its continuance in OPEC no longer serves its national interests. The timing of its announcement is probably motivated by a desire to minimise the fuss, as attention is focused on the war. But also signals a bit of a break from its Arab Gulf neighbors — especially Saudi Arabia — in terms of geopolitics.Will the UAE’s decision make a major difference to the supply and price of oil and gas?It will not make any difference so long as the Strait of Hormuz remains closed, because no production increase is possible until then anyway. Even after the Strait of Hormuz reopens, I do not see any major immediate difference in the situation due to this decision, because oil prices may remain relatively high for some months and all producers are likely to raise production to the fullest extent at the earliest possible — unless a global economic recession has greatly damaged demand. Story continues below this adAlso Read | How OPEC dictated oil prices for decades, and why UAE is exiting itThe impact of the UAE’s decision on oil supply and price would be felt only in the longer run. Its production capacity of five million barrels per day, operating fully and expanding outside of OPEC restraints, should help keep prices down.How might the UAE’s decision constitute a break from the rest of the GCC?The UAE was attacked much more aggressively by Iran than any other GCC nation. It has reportedly urged a strong military retaliation but the GCC nations have remained passive defenders against missile and drone attacks. The UAE and Saudi Arabia — the leader of OPEC — have had a long-running rivalry under the surface for influence in the region, supporting opposing sides in the civil wars that have devastated Yemen and Sudan. The UAE has been one of only two GCC countries to normalise relations with Israel and, before conflict erupted in 2023, was keen to pursue economic cooperation with that country. In contrast, Saudi Arabia and most other GCC nations have been cautious vis-a-vis Israel, with an eye on domestic public opinion.Expert Explains | What the UAE exit means for Saudi Arabia’s Gulf leadershipEconomically, too, the UAE has a quite different outlook — its per capita GDP is over 50% higher than that of Saudi Arabia and Kuwait, and 10 times higher than that of Iraq, all key OPEC members. Story continues below this adThe UAE’s economy is far less dependent on oil and gas income than those of other OPEC members — to the extent of just about 30%. It has diversified into a major center of international trade, finance and tourism. This outlook is quite different from that of Saudi Arabia which must rely much more on high oil prices to balance its books and keep its large, young population content. These tensions and differences have mounted over time. And with the Iran war now having imposed a severe strain on national income, the UAE felt that remaining subject to OPEC’s influence was detrimental to its economic interests.Will OPEC and OPEC+ survive the exit of the UAE?OPEC is definitely weaker after the UAE’s exit but it will survive, unless another major member withdraws, which seems unlikely at this time. It still controls a third of global oil production (50% if one considers OPEC+) and therefore has the power to move the global economy. But global geopolitics and the objectives of its members have changed, and maintaining consensus will become a greater challenge. A key factor will be the relationship between Saudi Arabia and Russia — the two largest OPEC+ producers. When OPEC was founded in 1960, its objective was to seize control of oil production and income for the member countries, away from the Western companies that had controlled their oil fields since colonial times. There was a decidedly anti-Western motivation, the Arab nations as well as Iran were on the same side, and were also intermittently at war with Israel.Story continues below this adNewsletterFollow our daily newsletter so you never miss anything important. On Wednesday, we answer readers' questions.SubscribeBut for a long time since the 1980s, OPEC’s function has been mainly economic, to balance the oil markets, with Saudi Arabia becoming the so-called swing producer — activating spare capacity to meet shortages, and curtailing production whenever oil prices became too low. This has been a useful role, as it has brought stability to the oil market. The Arab world had, de facto, by then made peace with Israel. The anti-Western feeling had given way to economic and defence cooperation underpinned by a major US military presence in the region. This shift had much to do with the Iranian Revolution of 1979 which was decidedly anti-American, and whose proletarian, revolutionary character led by the Shia clergy also caused great anxiety among the wealthy (Sunni) Arab autocracies. Only occasionally have OPEC’s interests diverged from those of the West thereafter. They did so in 2014 when OPEC tried — unsuccessfully — to drive the newly-emerged American shale oil and gas producers out of business by raising production and crashing oil prices.It is hard to see a definite political strategy for OPEC+ until the global geopolitical churn settles down. One would hope that OPEC+ would adopt a liberal production policy once the Strait of Hormuz opens in the interest of the global economy. But it remains to be seen whether Saudi Arabia and Russia — the main players in OPEC+ with a need for vast oil incomes — would concur.