OPEC suffered a heavy blow on Tuesday when the United Arab Emirates announced it had quit the oil exporting group.

The stunning loss of the UAE, a longstanding OPEC and OPEC+ member, could sow disarray and weaken the energy producing bloc.

Jorge Leon is the head of geopolitical analysis at Rystad Energy and a former OPEC officer in Vienna.

He [said] the move by the UAE seems to highlight a regional divide.

"I think we see two clear, clearly differentiated groups. On the one hand we have Saudi Arabia, Pakistan, Egypt and Turkey, which are forcing themselves as the energy, the security leaders in the region. And on the other hand, as you correctly mentioned, you have the UAE which has close links to India, Israel and the U.S."

UAE Energy Minister Suhail Mohamed al-Mazrouei told Reuters the decision was taken after a careful look at the regional power's energy strategies.

He said, "this is a policy decision, it has been done after a careful look at current and future policies related to level of production."

Mazrouei added the move would not have a huge impact on the market because of the situation in the Strait of Hormuz.

It comes at a time when the Iran war has caused a historic energy shock and unsettled the global economy.

OPEC Gulf producers have already been struggling to ship exports through the Strait of Hormuz.

But the narrow chokepoint between Iran and Oman that once carried one-fifth of the globe's crude oil and liquefied natural gas has been effectively closed since the U.S. and Israel attacked Tehran at the end of February.

Once the strait reopens, however, the UAE could significantly boost its exports.

"And I think what this really means for oil markets is we're likely to see much more production from the UAE coming forward. And that would mean lower oil prices in the medium and long term."

The UAE exit from OPEC represents a big win for U.S. President Donald Trump, who has accused the organization of "ripping off the rest of the world" by inflating oil prices.

Trump has also linked U.S. military support for the Gulf with oil prices, saying that while the U.S. defends OPEC members they "exploit this by imposing high oil prices."

Posted by: AAngeles/NET25 News