Actually, I didn’t really know what OPEC was for or what kind of organization it actually is.
So when I heard that the UAE was leaving, I honestly had no idea what kind of impact it would have, or whether it was a good thing or a bad thing.
According to news reports and explanations by experts, Over the past few years, the UAE has invested a huge amount of money, actually spending around 150 billion dollars on its oil facilities. So now it can produce a lot more oil and gas than before. The UAE wants to sell as much oil as they can.
However, OPEC sets production limits for member countries to keep oil prices high. So the UAE has probably been feeling frustrated because it hasn’t been able to fully make use of its production capacity.
According to experts, OPEC was originally created to support countries that are completely dependent on oil.
The countries that were basically leading OPEC were Saudi Arabia and the UAE.
I’ve heard the relationship between the two countries has been a little tense in recent years because they’re moving in totally different directions.
And honestly, Saudi Arabia's economy is still heavily dependent on oil.
but the UAE knew the world would eventually try to move away from fossil fuels, The UAE had already started trying to build an economy that was less dependent on oil.
Surprisingly, oil money actually makes up less than 25% of its economy now.
The UAE and Saudi Arabia have gradually started heading in completely different directions, and that was probably a major reason behind the tension between them.
It kind of looks like the attacks on Iran by the United States and Israel triggered the UAE’s decision to leave OPEC. But from what I’ve read, the UAE had actually wanted to withdraw for many years already.
So it seems more accurate to say that the UAE took advantage of the current chaos. Because of the conflict, shipping through the Strait of Hormuz(ﾎﾙﾑｽﾞ) has been restricted, and global oil supplies are already unstable, so the UAE probably expected that the additional impact of its withdrawal on oil prices and supply would be limited. So maybe the current crisis wasn't the cause of UAE's withdrawal but rather the perfect opportunity for the country to do so.
By the way, I've heard that the UAE is actually Japan's largest oil supplier. They provide over 40% of our crude oil, which is even more than Saudi Arabia. So naturally, people are wondering how their exit from OPEC will affect our lives in the long run.
But probably we won't know the real impact until the blockade on the Strait of Hormuz is finally lifted and shipping goes back to normal.
This isn’t directly related to the UAE leaving OPEC, but the restrictions in the Strait of Hormuz caused by Iran seem to be having quite a big impact already. So far, there doesn’t seem to be a serious shortage of gasoline or energy itself, but there's a big buzz in the news about a shortage of naphtha, which is a petroleum-based material used to make plastics and synthetic fibers.
At the individual level, it’s not like people’s daily lives have suddenly become inconvenient yet, but for companies, securing enough naphtha seems to be getting really difficult.
