UAE cuts ties with OPEC and OPEC+

In terms of oil and its related materials, the first place anyone would go to is the OPEC countries and OPEC+ nations. Since these nations drive the prices of oil, the markets, and commodities, it is pretty relevant for the world economies in terms of the decisions they take. The world continues to function with oil as the source of energy. If any of the members in the group decides to decide to step away or make an important policy change, it hints at a major tectonic shift in the global order. Given the recent disturbance in the Middle East, the UAE, a member of the GCC, has decided to step away from the oil cartel. This came as a shocking surprise to the global economy

UAE cuts ties with OPEC and OPEC+

Major reasons

The war has been one of the important factors for many of the nations to take drastic yet cautious moves. UAE decided to step down to take a major gamble on the situation. One of the major reasons is the “high volatility of the prices of oil”. The war has driven the oil and its related products to a volatile situation, triggering a major supply shock worldwide. With the UAE having a long relationship with the group, close to 70 years, it means a structural shift is likely to make headway. With the major investments put in place by the UAE to ramp up production, the OPEC groups are curtailing the production- defeating UAE’s purpose. As a nation, they feel it’s an opportunity lost. Considering the opportunity to increase production between 3-6 million barrels per day, with the investments in place by 2027, the UAE can position itself as a free agent producing oil without any strings attached. This can help in controlling the prices globally, positioning itself as the leader of oil.

Another important reason is the growing rift between the UAE and Saudi Arabia. With the recent conflict in Yemen, both nations had differences of opinion in the group that needed support, and the partners had a major fallout. And with Saudi Arabia inching close to the goals of 2030, the UAE felt that it would be left in the shadows in terms of overall growth and development of its state.

What does all of this mean for India???

India sees an opportunity for its economy. With the UAE going forward with increasing its oil production, India can benefit from it by lowering its import bill by increasing its supplies. It will definitely help in reducing the impact of inflation due to the rise in oil prices. Logistically, for India, it's much more convenient in terms of importing oil from the UAE, which is an added benefit. Adding to all of this, the bilateral trade between the two nations would be much better, giving added benefit to both nations, transferring technology and knowledge over a long period of time. A trade with the local currency could see a potential scene, as talks of moving away from the “US dollar” as a means of trade.  If one looks at all the mentioned reasons stated, India stands to gain from the opportunity the UAE is currently presenting itself.