Global Oil Prices Rise On Knee-jerk Reaction Following UAE's Exit From OPEC, OPEC+
KUALA LUMPUR, April 28 (Bernama) -- Global crude oil prices rose in a knee-jerk reaction following news that the United Arab Emirates (UAE) has left the Organisation of the Petroleum Exporting Countries (OPEC) and the broader OPEC+ alliance.
At 9.52 pm, Brent crude oil price rose by 2.37 per cent to US$110.79 per barrel, West Texas Intermediate (WTI) crude oil increased by 3.23 per cent to US$99.48, while Murban crude oil edged up 2.54 per cent to US$106.84 per barrel.
UAE, which produces Murban oil, accounted for a substantial portion of OPEC's output.
Rystad Energy head of geopolitical analysis Jorge Leon said that with UAE’s withdrawal, Saudi Arabia is doing the heavy lifting on maintaining price stability, and the market loses one of the few shock absorbers.
“Losing a member with 4.8 million barrels per day of capacity, and the ambition to produce more, takes a real tool out of the group's hands. The timing tells you something about where the oil market is going.
“With demand nearing a peak, the calculation for producers with low-cost barrels is changing fast, and waiting your turn inside a quota system starts to look like leaving money on the table,” he said in a research note tonight.
The research firm said UAE’s departure removes one of the core pillars underpinning OPEC's ability to manage the market.
“While near-term effects may be muted given ongoing disruption in the Strait of Hormuz and broader geopolitical uncertainty, the longer-term implications are more consequential.
“A structurally weaker OPEC, with less spare capacity concentrated within the group, will find it increasingly difficult to calibrate supply and stabilise prices,” it said.
Earlier, it was reported that UAE has quit OPEC and OPEC+, dealing a heavy blow to the oil exporting groups at a time when the ongoing war between Iran and the United States has caused a historic energy shock and unsettled the global economy.
The news report also states that the move came after the UAE criticised fellow Arab states for not doing enough to protect it from numerous Iranian attacks during the war.
Other OPEC members include 11 major oil-producing nations, namely five founding members -- Saudi Arabia, Venezuela, Iran, Iraq and Kuwait, followed by Algeria, Congo, Equatorial Guinea, Gabon, Libya and Nigeria.
-- BERNAMA