Russia has indicated that the alleged move by the United Arab Emirates to leave OPEC may have far-reaching consequences on the oil markets around the world by adding supply and possibly reducing prices in the future. The Russian Finance Minister Anton Siluanov said that such a plan would enable the UAE to increase the production of oil without the limitations that are usually caused by the coordinated output policies of OPEC.
Siluanov argues that the power of OPEC is in its group approach to controlling production levels of the member nations. Provided that individual countries start to act on their own, especially the large producers such as the UAE, it may result in a boom of oil supply in the world market. According to him, in case the countries initiate production as much as they can without coordination, the prices will automatically fall.
Although a non-member of OPEC, Russia has been quite aligned with the group, under the umbrella of OPEC+, to make decisions on output in consultation with major producers like Saudi Arabia. In the recent past, the country has enjoyed high prices of oil particularly due to the geopolitical tensions in the Middle East that have increased supply constraints.
The comments of Siluanov are the first official reaction of Moscow on the possible withdrawal of the UAE that has shocked the world markets. Any failure to maintain production discipline in OPEC can according to analysts redefine the energy landscape resulting in more competition amongst the oil producing countries.
The implications of the development will reach far beyond the sphere of oil prices and affect the global economic stability in general since energy costs have been a major factor in affecting inflation and growth across the world.