"It is a very big deal that the United Arab Emirates (UAE) has announced its abrupt exit from Opec, the Organisation of Petroleum Exporting Countries. The Emiratis were members even before they became a nation state in 1971. While Opec production is dominated by Saudi Arabia, the UAE had the second highest spare production capacity. In other words, it was the second most important swing producer, capable of increasing production to help ease prices. Indeed it is precisely this that led to long-term reconsiderations of the UAE's position. Put simply, the UAE wanted to use the considerable capacity it has invested in. Opec quotas limited its production to 3-3.5 million barrels per day. Opec membership sacrifices, in terms of lost revenues, were being made disproportionately by the UAE."

"The UAE was the most influential member of OPEC behind Saudi Arabia. It was one of the few members, along with Saudi Arabia, that had meaningful spare production capacity to influence prices and respond to supply shocks. Spare capacity is the idle production that can be brought online quickly to address major crises. Saudi Arabia and the UAE together control a majority of the world's total spare capacity of more than 4 million barrels per day, making them particularly influential during periods of distress. The UAE's departure therefore removes one of the core pillars underpinning OPEC's ability to manage the market. OPEC will become structurally weaker as a consequence."

"once the strait reopens, a UAE pumping freely towards 4.8 million barrels per day represents a real shift of 1 to 2 per cent of global demand."

"If countries that are abiding by their quota get disgusted with those that don't, we could see additional exits that could eventually make OPEC irrelevant as a cartel."

"the UAE's departure represents a win for US President Donald Trump, who has previously attacked Opec for 'ripping off the rest of the world'."