How the United Arab Emirates shocking OPEC exit could drive down gas prices

The United Arab Emirates announced Tuesday that it will leave OPEC effective May 1 – a shocking blow to the world’s largest oil cartel that could help drive down gasoline prices.Though the Persian Gulf kingdom did not give a reason for its exit, its energy supplies have been severely disrupted amid the Iran war – both by Iranian drone strikes on its facilities and the blockade of the Strait of Hormuz.Its energy minister said Tuesday that it is aiming to achieve 5 million barrels of oil output capacity by 2027, and it would like more freedom in pursuing that goal.OPEC – whose members collaborate to restrict supply and drive prices higher – likely would have stood in the way.Joe Adamski, managing director of ProcureAbility, a supply chain consultancy, told The Post the extra output could ultimately lower oil prices by $5 to $10 a barrel.For every dollar of oil price movement, gas prices typically move 3 or 4 cents, according to Jeff Krimmel, founder of Krimmel Strategy Group.

That means prices at the pump could drop 40 cents if the UAE ramps up its output.The UAE “leaving OPEC does significantly weaken OPEC’s position and ability to influence the price of oil globally, so I think overall for consumers, that’s a good thing, as well, because you’re removing that artificial constraint on the market,” Adamski said.Kenny Zhu, lead energy and commodities researcher at Global X, said the UAE’s exit “represents the most conspicuous exit of a member-state in recent history, given the size and scale of Abu Dhabi’s production.”“The impact is more likely to be felt by global energy markets over the long-term than in the short-term, since the majority of OPEC’s production remains impaired by ongoing disruptions to the Strait of Hormuz,” Zhu wrote in a note on Tuesday.Zhu added that the UAE’s exit could increase market volatility and potentially shift market share to the US and Canada.The UAE joined OPEC in 1967, seven years after the organizati...