Live updates: United Arab Emirates says it will exit OPEC, while US-Iran negotiations stall

UAE exit OPEC roils oil markets as US-Iran talks collapse

Muhammad Asghar | GlobalBeat

The United Arab Emirates announced its withdrawal from OPEC on Sunday while Washington and Tehran failed to reach a nuclear agreement after marathon talks in Muscat.

Oil prices jumped 4.2% within minutes of Abu Dhabi’s surprise statement, which ends 57 years of UAE membership in the producers’ cartel.

The twin developments threaten a new era of energy volatility and heightened regional tensions. The UAE is OPEC’s third-largest producer with 4.2 million barrels per day capacity. Tehran suspended its diplomacy with Washington after what Iranian officials described as “ridiculous” final demands from the Trump administration.

Energy traders scrambled to cover short positions in London and New York. Brent crude surged $3.41 to $84.63 per barrel by 1355 GMT, the biggest single-day gain since October when Hamas attacked Israel. The gulf between UAE ambitions and OPEC quotas had widened in recent months as Abu Dhabi raced to expand capacity to 5 million barrels daily by 2027, figures from the state company ADNOC show.

“The Emirates will pursue a separate oil policy effective 30 June,” Energy Minister Suhail Al Mazrouei told reporters in the capital. He emphasized that the decision came “with considerable respect” for the organization but reflected “our national energy transformation strategy.” Government sources later indicated that ADNOC executives had pressed exit plans for over a year, frustrated by Saudi insistence on relatively modest output caps designed to protect the Russia alliance within OPEC+.

UAE officials also wanted to maximize drilling at fields operated by ADNOC and partners including ExxonMobil, restricting that plan “has become pointless in the current pricing environment,” an ADNOC adviser told GlobalBeat on condition of anonymity as they were not authorised to speak publicly. Western diplomats viewed the move as an implicit gambit to pressure OPEC接班-来 for bigger quotas, but Riyadh rejected that in talks last week, insisting the UAE honor its share through 2024.

Negotiators from Iran and the United States departed Muscat late Saturday with no joint declaration, only tense rival press briefings after six days of indirect discussions facilitated by Oman. Iranian Deputy Foreign Minister Ali Bagheri Kani told state television the United States “attached impossible conditions” involving permanent limits on enrichment alongside immediate acceptance of full UN inspections. A senior US official, speaking to reporters without attribution required by the State Department, countered that Tehran demanded “immediate removal of all sanctions” guarantees that effectively declared an economic “victory.”

Oil traders interpreted both events as bullish. “Any disruption to OPEC unity plus stalled US-Iran diplomacy equals higher risk premium,” Tamar Essner, director of US energy at Vanda Insights in Singapore, said in a client note. Analysts at Goldman Sachs reset their Q3 forecast from $83 to $92 per barrel while advising clients to expect “frequent headline-driven volatility.”

Iran holds the world’s second-largest gas reserves and fourth in proven oil at 155 billion barrels, according to British Petroleum’s annual energy review, yet exports only 1.5 million barrels per day by most tanker-tracked estimates because of US and EU sanctions. Lifting those measures had offered a rare avenue for additional supply to reach European markets seeking alternatives to Russian crude. “That window now appears shut,” Karen Young, an energy economist at the Columbia University School of International and Public Affairs, said by phone.

European foreign ministers expressed alarm. German Chancellor Friedrich Merz scheduled an emergency call for Monday with French President Emmanuel Macron to coordinate joint energy security measures, according to a statement from his Berlin office. EU energy chief Busra Celik told reporters in Brussels the bloc stands “ready to release strategic stocks” should global prices exceed $90 per barrel for more than five consecutive trading days, a threshold triggered during the 2022 Ukraine war.

Russia counted itself an OPEC victor. “The importance of Saudi Arabia and Russia as pillars of world stability was demonstrated today,” Kremlin spokesman Dmitry Peskov declared on Sunday, pointing to the divided Gulf producers. Many veteran Moscow energy officials see less discipline within OPEC+ as prolonging high prices essential to financing Kremlin military operations in Ukraine. Russian Urals crude trades around $70 per barrel despite a $60 G7 price cap, Reuters shipping data show.

Background

The UAE joined OPEC in 1967, just six years after the group’s formal establishment. Initially a minor Gulf exporter, Abu Dhabi’s managed output expanded dramatically after multinational concessions began transferring toward state-owned ADNOC from the late 1970s. Over the past decade the emirate courted Western capital while investing heavily in upstream capacity, aiming to challenge neighbours like Saudi Arabia as production swells to anticipated global demand peaks later this decade. Friction over quota compliance surfaced periodically; former ADNOC chief Sultan al-Jaber likewise clashed with Saudi oil officials, though he never openly advocated exit because of the Emirates’ diplomatic ties within the GCC.

Iran’s nuclear impasse spans more than 20 years and three US presidential administrations. Barack Obama brokered the 2015 Joint Comprehensive Plan of Action that eased sanctions in exchange for strict enrichment limits. Donald Trump abandoned that deal in 2018, reinstating sanctions. President Joe Biden pledged to restore the accord but rounds of indirect talks through 2022 ended in stalemate. The current renewal of negotiations under Trump, who has said he wants Iran to “get rid of bombs forever,” mirrors broader pressure campaigns that have survived electoral transitions with bipartisan resolve.

What’s Next

ADNOC will host an investors call on Tuesday to outline post-OPEC pricing strategy, while Saudi Energy Minister Abdulaziz bin Salman meets counterparts from Kuwait and Iraq in Kuwait City on Wednesday, possibly tightening supply further should markets perceive heightened demand. Diplomatic sources peg 28 April as the next potential US-Iran contact through EU intermediaries in Switzerland, though each government denies a date is fixed or even desirable at present oil price trajectories.

The Emirates now faces the challenge of maintaining stable international relations without OPEC diplomatic cover, while Washington contemplates tighter sanctions enforcement designed to keep Iran from building nuclear weapons options. Markets have priced in short-term jitters but real test of Gulf producer solidarity arrives mid-summer when peak Asian demand forces buyers to choose between long-term supply commitments, providing clearer evidence whether the OPEC umbrella remains necessary or each nation will now sell as their reserves and fiscal needs command, setting new competitive battlegrounds from China to California.