The United Arab Emirates delivered a major blow to OPEC by quitting the oil cartel, and the move could eventually bring gas prices down, according to CNN.
Here’s why: The U.A.E. is OPEC’s third-biggest oil producer after Saudi Arabia and Iraq. OPEC production quotas limited the U.A.E.’s oil output to 3.2 million barrels a day, but it has the capacity to produce closer to 5 million barrels a day. The potential additional supply would meet around 1-2% of daily global oil demand.
But don’t expect immediate relief at the pump. The national average U.S. gas price is around $4.23, and Brent crude is trading at around $117 a barrel. The Strait of Hormuz remains largely shut due to the Iran conflict, choking off 10-12 million barrels of crude a day from global markets. But once the Strait reopens, higher U.A.E. supply should push prices down. OPEC’s influence has been waning for years. The cartel peaked at 16 members but is now down to 12 after Ecuador, Indonesia, Qatar and Angola exited in recent years.
The United Arab Emirates delivered a major blow to OPEC by quitting the oil cartel, and the move could eventually bring gas prices down, according to CNN.
Here’s why: The U.A.E. is OPEC’s third-biggest oil producer after Saudi Arabia and Iraq. OPEC production quotas limited the U.A.E.’s oil output to 3.2 million barrels a day, but it has the capacity to produce closer to 5 million barrels a day. The potential additional supply would meet around 1-2% of daily global oil demand.
But don’t expect immediate relief at the pump. The national average U.S. gas price is around $4.23, and Brent crude is trading at around $117 a barrel. The Strait of Hormuz remains largely shut due to the Iran conflict, choking off 10-12 million barrels of crude a day from global markets. But once the Strait reopens, higher U.A.E. supply should push prices down. OPEC’s influence has been waning for years. The cartel peaked at 16 members but is now down to 12 after Ecuador, Indonesia, Qatar and Angola exited in recent years.