UAE's shock OPEC exit: What it means for the oil cartel's future and for crude prices

the uae left opec this week, weakening the cartel's grip on oil markets. it was the second-most influential member after saudi arabia, and one of the few with meaningful spare capacity — the idle production that can be turned on fast during crises. together, saudi arabia and the uae control most of the world's 4 million+ barrels per day of spare capacity. "departure therefore removes one of the core pillars underpinning opec's ability to manage the market," said jorge león of rystad energy. the uae's exit also undermines saudi's ability to run the group, said david goldwyn, a former state department energy envoy. riyadh still has its own spare capacity but now has a weaker hand. the uae's decision comes after weeks of iranian missile and drone attacks on shipping in the strait of hormuz, which have constrained its exports. energy minister suhail al mazrouei said the exit was timed to limit disruption to fellow producers. oil futures barely reacted tuesday. but the departure could prove bearish later, said again capital's john kilduff, by undermining the cohesion needed to keep prices from falling during supply gluts. the uae wants freedom to reach its goal of 5 million bpd of capacity by 2027, al mazrouei said.