On the 28th (local time), the United Arab Emirates (UAE) announced that it would withdraw from the Organization of the Petroleum Exporting Countries (OPEC), the world’s largest oil cartel, and from OPEC+, a consultative group of major oil producers. The UAE has long voiced dissatisfaction that OPEC’s oil production quota has been set to its disadvantage.

According to Reuters, the UAE Ministry of Energy said it would withdraw from OPEC and OPEC+ on the 1st of next month, stating, “This decision was made after a comprehensive review of production policy and current and future production capacity, and is intended to effectively meet national interests and the market’s urgent needs.”

The UAE said that through its withdrawal it has freed itself from the obligations of an OPEC member state and secured flexibility in oil production policy, adding that it did not hold prior direct consultations with other members, including Saudi Arabia, regarding its exit from OPEC.

The UAE added, “Short-term geopolitical volatility, including turmoil in the Persian Gulf and the Strait of Hormuz, is affecting supply chains, but in the medium to long term, continued growth in global energy demand is expected.”

For a long time, the UAE has suggested the possibility of leaving OPEC, arguing that member-by-member production quotas unfairly restrict its oil exports. The UAE hopes to expand its oil exports in preparation for a future decline in global oil demand.

The UAE’s daily oil production is 2.5 million barrels, similar to Kuwait’s, falling short of Saudi Arabia’s (10 million barrels), Iraq’s (4.3 million), and Iran’s (3.5 million).

Given the prolonged blockade of Hormuz due to the U.S.-Iran war, it is unclear whether the UAE can immediately move to raise output even if it leaves OPEC. The UAE has the Port of Fujairah, which allows tankers to sail to the Gulf of Oman without passing through Hormuz, and there is discussion that it could export oil to Asia and elsewhere via Fujairah.

Jorge Leon, an analyst at the energy analytics firm Rystad Energy, told Reuters that “the UAE’s withdrawal signifies a major change for OPEC,” adding, “Together with Saudi Arabia, the UAE is among the few members with meaningful spare production capacity.”

He said, “Because of the turmoil in Hormuz, the short-term impact of the UAE’s exit from OPEC may be limited, but in the long term it will lead to a structural weakening of OPEC,” adding, “Having left OPEC, the UAE will have both the incentive and the capability to increase output.”

Some also assess that the UAE’s exit from OPEC is good news for U.S. President Donald Trump. President Trump has accused OPEC of artificially inflating oil prices and “exploiting the whole world.”