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UAE’s exit from OPEC means turmoil for Africa’s oil producers
Africa Confidential
The decision by the United Arab Emirates to leave the Organization of the Petroleum Exporting Countries (OPEC) on 28 April threatens the cartel more than at any time since its establishment five decades ago. It’s bad news for Africa’s oil-producing countries because it will create more market volatility, especially if there is a production race after a settlement between the United States and Iran to reopen the Strait of Hormuz. Such a race would favour the biggest producers such as the UAE, Saudi Arabia and Russia, sidelining the many smaller producers in Africa. Somewhere in between are Africa’s mid-scale producers such as Nigeria, Angola, Libya and Algeria.
It will also deepen the rivalry between the UAE and Saudi Arabia, which will struggle to uphold OPEC solidarity and discourage further defections. Already Abu Dhabi and Riyadh are fighting it out through proxy wars in the wider region: most devastatingly in Sudan, but also in Yemen. Oil industry analysts say the UAE’s decision is a response to its humiliation by Saudi Arabia in July 2021 in a fight over production levels at an OPEC meeting.
Leaving OPEC will allow the UAE to exceed the cartel’s production caps and ramp up production. The UAE can produce around 4.5 million barrels a day compared to pre-war output of 3.7m b/d, and could hit 5m b/d by the end of 2027. Increased production will, in general, be good news for Africa’s 29 oil importers.
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