United Arab Emirates quits OPEC as Iran war raises Gulf tensions

The United Arab Emirates said Tuesday that it would leave OPEC, the Organization of the Petroleum Exporting Countries, which coordinates oil output among leading energy producing nations.

The departure from OPEC will likely lead the UAE to boosting energy output. Although with the Strait of Hormuz closed, it's not clear how fast any increased production would be able to reach global markets.

"Following its exit, the UAE will continue to act responsibly, bringing additional production to market in a gradual and measured manner, aligned with demand and market conditions," its state-run news agency said.

In recent years, the UAE's oil output was the third largest in OPEC, behind only Saudi Arabia and Iraq. While Abu Dhabi had joined OPEC in 1967, the full United Arab Emirates has been a member since its creation as a sovereign nation in 1971.

“While near-term volatility, including disruptions in the Arabian Gulf and the Strait of Hormuz, continues to affect supply dynamics, underlying trends point to sustained growth in global energy demand over the medium to long term,” the UAE added in the statement posted to the website of its state-run news agency, using a name that some Arab nations use to refer to the Persian Gulf.

“The UAE withdrawal marks a significant shift for OPEC,” Rystad energy analyst Jorge Leon said. “While near-term effects may be muted given ongoing disruptions in the Strait of Hormuz, the longer-term implication is a structurally weaker OPEC.”

Meanwhile, the price of U.S. crude oil surpassed $100 per barrel for the first time since April 10, after peace talks with Iran failed to show meaningful progress.

After breaking above $100, which is seen by analysts as a resistance threshold, U.S. West Texas Intermediate crude rose to nearly $102 per barrel in early morning trading.

International oil benchmark Brent also jumped sharply in early trading, rising to nearly $113 per barrel.

On Tuesday, the nationwide average price per gallon of gasoline was $4.18, its highest level this year so far, according to AAA.

After President Donald Trump announced a ceasefire with Iran on April 7, the price of Brent plunged more than 17% by April 17, when Iran said the Strait of Hormuz was open to commercial vessels.

Once that turned out not to be the case, prices resumed climbing again.

The commodities analysts at Goldman Sachs said that currently 14.5 million barrels per day of crude oil production in the Persian Gulf region have been cut off as a result of the war with Iran.

The war has also cut off jet fuel supplies. Airlines around the world have started cutting capacity in recent weeks, citing the rising price of jet fuel. (Source: NBC News)