AA Edit | Iran War Wrecks OPEC Unity As UAE Pulls Out

At a time when the effects of the Iran war are being felt far beyond West Asia, geopolitical tremors within the region itself have led to a startling break in Arab ties. The United Arab Emirates's ditching the Organisation of Petroleum Exporting Countries represents an inflection point in global oil supply as the formation of the OPEC cartel in the 1960s had changed the very fundamentals of supply and demand and global economics itself as the Gulf grew exponentially with the petrodollar.

The UAE, at the receiving end of much of Iran’s counter strikes in its war against the US and Israel with over 2,200 drones and missiles aimed at it, had many reasons to move away from Saudi Arabia. Its decision to leave OPEC will, however, not have an immediate cooling effect on world oil prices as they are now at the mercy of the constrained state of the Strait of Hormuz as the choke point is virtually shut with Iran’s actions as well as a US blockade of Iran ports.

In the long run, the UAE decision not to be obligated to follow OPEC’s diktats on producing oil and pump away according to its will, might help cool global oil prices for the good of the consumers, including the US which imports Gulf oil to make up for its own reserves being mostly of the light variety which is good for petrol but not for heavier fuels like diesel that contain more energy.

The UAE’s ties with the Saudi royals had been under strain ever since the nations started backing rival factions in the Yemen civil war. Also, the Saudis’ defence pact with Pakistan as well as Islamabad’s questionable role as mediator in which it had been seen to be too soft on Iran’s aggressive actions against Arab states was being frowned upon in the Emirates.

So disruptive has been the war that the US President Donald Trump waged against Iran at the behest of Israel that the world has been paying the price, literally for its oil as well as suffering the shortages caused by the virtual closure of the Strait of Hormuz.

One of the unintended consequences of the war has been this rupture in relations between Abu Dhabi, more oil-rich than other Emirates and Riyadh, which for decades has been virtually dictating the price of oil in enforcing production cuts.

Before the ceasefire came into effect, the UAE and Saudi Arabia were known to have been pushing the US to step up the aggression in the war and defeat Iran, but without being able to say so to the Gulf Cooperation Council or publicly so as not to offend Islamist sensitivities.

The current attritional standoff may not be suiting the region, but the fact is the UAE, which has for long been pushing for closer US and Indian ties, has seized an opportunity to be able to act independently once a settlement is reached and oil starts flowing again out of its wells and ports.

The latest geopolitical twist with the unity of oil producers, in place since the mid-1960s, threatened, the war may have contributed to permanent changes in the way the world buys its oil, especially from the Gulf region. More market shifts are likely to take place as the dangers of narrow waterways become apparent. But first the world would like to see peace reigns, more so the UAE that has suffered even more than its Arab neighbours.