The Guardian view on the UAE quitting Opec: whatever importers pay, the price of fossil fuels is too high | Editorial

Opec appears to be the latest casualty of the Iran war. On Tuesday, the United Arab Emirates announced that it was leaving the oil cartel after 60 years. The loss of a critical member is a blow to the group and its de facto leader, Saudi Arabia, in the midst of the biggest supply crisis in history.

This is a geopolitical decision, not merely an economic one. The UAE has built itself into an increasingly interventionist and unilaterally minded power, not only challenging Riyadh’s dominance but undermining its more cautious approach to regional affairs. The rift has become increasingly public and bitter – with Saudi Arabia bombing what it called a UAE-linked arms shipment in Yemen in December. Abu Dhabi, as the main target of Iranian strikes among the Gulf countries, is also enraged by what it sees as a feeble regional response to the current conflict, and has been privately pushing for counterattacks.

Yet oil quotas have long been a grievance: Abu Dhabi has pushed to pump much more, while Riyadh has insisted on curbing production to maintain the price. The Iran crisis is an opportunity, not the cause of this decision: the choking of oil supplies by the closure of the strait of Hormuz means that the announcement had limited immediate impact on markets. Even when the conflict ends, the effects of restarting production, rebuilding infrastructure and refilling strategic reserves will probably cushion prices.

However, the decision wounds a cartel already far from the peak of its power. It accounted for around half the world’s crude oil output in the 1970s, but thanks to surging production in the Americas, it is now around a quarter.

Without the UAE, which is key to Opec’s spare capacity, the group will find it harder to shape markets, and prices are likely to be more volatile. That may be bad news for the UAE itself. Some also think that Saudi Arabia could seek revenge by flooding the market with refined products, accepting the hit to its own coffers. And any deal with Iran would see more oil flow.

Donald Trump will welcome the weakening of Opec, which he has accused of “ripping off the rest of the world”. The UAE may hope for rewards including investment and priority in restocking missile interceptors. But it will also be more isolated regionally as it faces Iranian enmity – and increased dependence on a highly transactional, utterly unpredictable US administration is risky.

Any faint hopes that the US might try to curb the UAE’s foreign policy now look even flimsier. Abu Dhabi is widely believed, despite its denials, to be the main backer of Sudan’s paramilitary Rapid Support Forces, who have carried out a catalogue of atrocities in the war. The broader danger is that the prospect of cheaper oil could slow the global shift to renewables, when its acceleration is needed. Paradoxically, that transition may have spurred the UAE to act now. Though it has rapidly diversified its economy, oil remains central; it may be seeking to fill its coffers while it can.

Its announcement came as 57 countries met for the world’s first conference on the transition to renewables. The climate case for action is clear. Oil-importing countries may also find that the economic impact of the UAE’s decision comes primarily from unpredictable prices rather than lower ones. This week’s announcement is no excuse to ease off on the transition, but all the more reason to press ahead with increased urgency.