For more than five decades, OPEC has been one of the pillars of the global system. It decides how much the rest of us pay for energy — and that price-setting power has made many of its members, especially the United Arab Emirates, extraordinarily rich. Why, then, would the UAE choose to exit, and possibly destroy, the world’s most profitable cartel?
Perhaps because the Emirates’ leaders saw the ground shift under their feet, and brought the house down about their ears before it fell of its own accord. The world OPEC was built for — and the world it then helped build — is no longer the one we live in.
Three big shifts have driven Abu Dhabi out of the club. The first is that its plans for the future diverged too much from those animating the bloc’s unofficial leader, Saudi Arabia.
Both of them see the threat of the post-oil world on the horizon, but have responded differently. The Emiratis obviously don’t welcome the end of their money-gushing wells, but have taken a national decision to get ahead of the problem. They want to invest as soon as possible in the growth engines of the future: data centers, financial hubs, new technologies. They don’t want their oil in the ground tomorrow; they want cash in their accounts today. And so they’re willing to pump a lot more, even if it means the price of each barrel they produce falls.
The Saudis would prefer to defer the post-oil future as long as possible. Their expanding population, the costs of their welfare state, their need to buy elite solidarity and popular quiescence — as well as their various techno-utopian extravagances — means their cost-benefit calculus differs. The IMF said in 2024 that they needed to keep the price of a barrel of crude up near $100. Saudi Arabia needs to maximize how much it earns a year, not how quickly it monetizes everything.
OPEC was struggling to manage such a fundamental divergence in expectations. But it would still have survived had the two countries in question still seen themselves as being essentially on the same side. Instead, they have increasingly found themselves opposing each other — backing rival factions in conflicts in South Sudan, the Horn of Africa, and Yemen.
In the past, these differences would have been managed, or wouldn’t even have been visible, had they had a common big brother capable of keeping them both in line. When they felt the US was responsible for their security, their own quarrels were mostly contained: They were unlikely to cause a crisis because their survival and prosperity were guaranteed by someone else.
A US that brings instability in its wake reverses that calculation. This second shift in context turns an inability to make common cause with your neighbors into a far bigger, more urgent problem. Power over structures like the Gulf Cooperation Council and OPEC begin to matter. Countries will leave blocs if they fear those might be used against them. Or they might shrug off group solidarity, and the constraints that come with it, just to find their own place in the sun.
Which is where the third shift comes in. This is no longer a world in which hierarchies discipline ambition. Regional and middle powers have the room to maneuver — or at least, they want to find enough space to do so. If the UAE thinks its Gulf neighbors aren’t helping stop the attacks from Iran that are crippling its confidence, it will find new friends.
There’s been a lot of talk recently about how middle powers might be able to reconstruct some shreds of the global order damaged by China’s disruptive rise and America’s recent irresponsibility. In the Gulf, we see the limits of that idea. Clearly, both the Saudis and the Emiratis expect to lead. (So, for that matter, do the Iranians.)
Middle powers may have the opportunity and the power to repair global systems, but most will bid to run their own neighborhoods alone, instead of leading the world together. A middle-power-managed order may not be more disciplined than the mess we have now. Turkey’s attempt to set up parallel influence systems across West Asia and North Africa, often in direct competition with the Gulf monarchies, is another example.
The UAE exit from OPEC was unexpected, but rational. It looked at all three of these changes — a post-oil energy world, a post-US security architecture, and a post-hierarchy global order — and decided its interests were no longer served by remaining within the institutions that had protected and enriched it for half a century.
When the foundation of an era falls, not every country caught in the collapse will pause to mourn its passing. Some will strip out what they can, and try to create a place of their own. Others will follow the UAE’s example. Our best hope is that some will put those pieces together, and build something that benefits us all.
Disclaimer: This report is auto generated from the Bloomberg news service. ThePrint holds no responsibility for its content.