60 years of membership. Gone in one announcement. No warning. No consultation. Saudi Arabia found out when you did.
Here's Why It Happened
Iran has been bombing the UAE since the war started February 28. Not threatening. Bombing.
- 537 ballistic missiles intercepted
- 2,256 drones intercepted
- 26 cruise missiles intercepted
- Biggest refinery shut down
- Largest gas processing facility hit twice
- Production collapsed 44%
They were getting bombed by a fellow OPEC member. The cartel did nothing. So they left.
What This Means For The Cartel
The UAE was $77 billion of OPEC's $455 billion in annual oil sales. They spent $150 billion building capacity OPEC wouldn't let them use. Outside the cartel...they can use all of it.
Kazakhstan is next. They've been defying OPEC+ quotas for over a year. Chevron, ExxonMobil, and Shell won't cut. The door the UAE just opened is the one Kazakhstan has been standing next to.
What It Means At The Pump
The UAE can't get barrels to market until Hormuz reopens. So don't expect relief at the sign this week. When the strait does open...an unconstrained UAE pumping toward 5 million barrels a day puts real downward pressure on the price floor Saudi Arabia has been defending. That's when you feel it.
Where It Goes From Here
OPEC has never lost a producer this big. Never under these circumstances. Never one that left with the capacity to flood the market the moment the strait reopens.
Saudi Arabia is now doing this alone.
This isn't a crack. This is a fracture.
Does OPEC survive this or is this the beginning of the end?