A source familiar with the imports file at the Ministry of Petroleum expects Egypt to partially benefit from the United Arab Emirates’ decision to withdraw from OPEC, the alliance of oil-exporting countries, should the UAE move to increase its exports to global markets and potentially cool the prices of imported oil.
The UAE surprised global markets yesterday by announcing its withdrawal from OPEC by May, the alliance of oil producing countries it joined over five decades ago. Members of alliance, which was founded in the 1960s, monitor the market and collectively decide to raise or lower oil production to maintain prices and balance supply and demand.
Analyses have suggested the move could liberate Abu Dhabi from the export restrictions OPEC imposes, thereby increasing global supply of oil. “The UAE will be able to raise its production to over 4.5 million barrels per day, compared to 3.4 million barrels under the current OPEC agreement. Consequently, the UAE will be able to create a market price parallel to the OPEC’s,” the source told Al Manassa, requesting anonymity.
Reports indicate that OPEC had been restricting the UAE’s exports, contrary to its aspirations to increase supply and thereby boost its crude oil revenues.
The source noted that as a major producer, the UAE’s exit from the alliance will grant it newfound production flexibility outside OPEC quotas. While this may boost supply or trigger market fluctuations, it will also enable Abu Dhabi to price its crude independently of the global organization.
Expectations of increased supply from Emirati oil have not yet contributed to a lowering of global oil prices. The risks of war with Iran and the persistent uncertainty over the reopening of the Strait of Hormuz have overshadowed the UAE’s withdrawal from OPEC.
The source noted that current geopolitical conditions might prompt the UAE to accelerate export increases through logistical alternatives, such as the Abu Dhabi–Fujairah pipeline, to avoid the risks of passing through the Strait of Hormuz, which could enhance the attractiveness of its oil in the global market.
The source also explained that, whatever the outcome of the UAE’s exit, the impact on Egypt will be mitigated by its limited reliance on Emirati crude, noting that the UAE accounts for only 10–15% of Egypt’s oil import contracts. According to the source, Egypt’s oil production ranges between 500,000 and 525,000 barrels per day, while consumption reaches 700,000 to 750,000 barrels per day.
The government, the source added, is working to limit the risks of global oil price fluctuations through several measures. These include increasing domestic production by intensifying research and exploration activities; expanding the use of natural gas as a cheaper alternative to liquid fuel; and continuously diversifying import sources to avoid dependence on a single supplier.
Global oil prices rose sharply following the US-Israeli war on Iran, to which the Iranian government responded by closing the Strait of Hormuz, one of the most prominent maritime routes through which oil tankers pass.
