Oil hits highest level since 2022 after UAE exits OPEC
Oil prices have climbed to their highest levels since 2022, with Brent crude topping $120 per barrel, as President Donald Trump weighs prolonging the U.S. naval blockade of Iranian ports and the Strait of Hormuz.
Highlights
- Brent crude rose above $121.70, and WTI rose above $108.09 per barrel.
- Trump is considering extending the blockade of Iranian ports and the Strait of Hormuz.
- The UAE has exited OPEC, potentially weakening the cartel.
Sharp price spike
According to Yahoo!Finance, on Thursday morning, Brent crude was trading above $126 per barrel, and at the time of writing, the price stood at $121.
Brent surged more than 12% overnight before partially pulling back, reflecting heightened concerns over a potentially prolonged closure of the critical shipping route.
The price of West Texas Intermediate (WTI) crude oil was $108.09.
UAE exits OPEC
Adding further pressure to the market, the United Arab Emirates has withdrawn from OPEC. The move weakens the cartel’s control over global oil supplies and risks deepening divisions with Saudi Arabia, the organization’s de facto leader.
Analysts note that tensions between the UAE and Saudi Arabia have been building for some time over differing oil policies, geopolitical disagreements regarding Yemen and Sudan, and intensifying economic competition. However, the deep trade and investment ties between the two countries make a full-scale rift unlikely.
Geopolitical tensions
According to sources familiar with White House discussions, Trump has told senior advisers he favors extending the naval blockade, with his team already preparing for a longer-term shutdown of the Strait of Hormuz.
Iran has downplayed the impact, stating there are “no concerns” regarding fuel supplies, while calling on citizens to conserve energy.
Analysts warn that if the Hormuz disruption continues for several more months, it could take up to a year for global oil markets to rebalance. Economists caution that prolonged high-energy prices could trigger a global recession.
Global economic risks
The combination of a blocked Strait of Hormuz—which normally carries about one-fifth of the world’s oil—and internal divisions within OPEC is creating significant uncertainty for energy markets.
Sustained high oil prices could fuel inflation and slow economic growth worldwide.
We also reported that the UAE leaves OPEC: How the oil market will change.
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