{"id":459433,"date":"2026-04-29T09:55:12","date_gmt":"2026-04-29T09:55:12","guid":{"rendered":"https:\/\/www.europesays.com\/ie\/459433\/"},"modified":"2026-04-29T09:55:12","modified_gmt":"2026-04-29T09:55:12","slug":"take-the-money-and-run-johns-hopkins-economist-steve-hanke-on-why-the-uae-quit-opec","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ie\/459433\/","title":{"rendered":"‘Take the money and run’: Johns Hopkins economist Steve Hanke on why the UAE quit OPEC"},"content":{"rendered":"

The decision was shocking. But the announcement April 28 that the UAE was leaving OPEC caps years of tension<\/a> where the desert state chafed under the cartel\u2019s quotas, and recently, encountered severe strain in its relationship with Saudi Arabia, the group\u2019s most potent force by far. Though it had felt strains before, it was the war in Iran that pushed the UAE over the edge. \u201cThe war suddenly made job one for the UAE \u2018take the money and run,’\u201d says Steve H. Hanke, professor of applied economics at Johns Hopkins University. \u201cFirst, OPEC stood partially in the way, now the Iran war poses a much bigger danger for a long time to come.\u201d<\/p>\n

The UAE didn\u2019t mention the Gulf conflict in its public announcement. Its press release stated that, \u201cThe decision reflects the UAE\u2019s long-term strategic and economic vision and evolving energy profile, including accelerated investment in domestic energy production.\u201d Included was a confirmation that the UAE seeks to lift production beyond the OPEC strictures\u2014framed by understatement apparently designed to avoid freaking the oil market. The UAE pledged to bring \u201cadditional production to the market in a gradual and measured manner, aligned with demand and market conditions.\u201d<\/p>\n

One observer the move didn\u2019t surprise was Hanke, who served on the UAE\u2019s Financial Advisory Council from 2008 to 2014. Years earlier, he had developed an economic model that addressed how fast an oil-rich nation should produce assuming different rates of decline in the \u201creal,\u201d or inflation-adjusted price of crude. That projection specified the rising \u201cdiscount rates\u201d at which the reserves lost value the longer they stayed in the ground. The faster the projected decline in the dollars a barrel fetched on the world market, the quicker a nation should pump to maximize its profits. Hanke shared his work with the UAE\u2019s economic leaders. \u201cThe system showing those optimal pumping rates made sense to them,\u201d says Hanke. \u201cIf you think future prices are going higher, you slow down and wait to produce. If you think they\u2019re going lower, you ramp up fast.\u201d<\/p>\n

Starting around 2021, the UAE began pushing hard for a much higher share of OPEC\u2019s output. For Hanke, the reason was obvious: Its Abu Dhabi-based government was increasingly concerned about the rise in green energy that threatened a long-running slide \u201creal\u201d fossil fuel prices. In fact, sustainable technologies looked so promising to the UAE that it invested heavily in projects ranging from solar farms to sustainable aircraft fuel to low-emission hydrogen. \u201cThat led to the strategy of \u2018pump like hell today,’\u201d says Hanke. In that vein, the UAE greatly accelerated its oil investments, and sought to put all that new capacity to work by pressing OPEC to lift its limit around 50% to roughly 5 million B\/D. Those demands soured its relations with Saudi Arabia, and the two nations also clashed<\/a> in their support of warring sides in both Yemen and Sudan. <\/p>\n

The haymaker, however, landed when fellow OPEC-member Iran unleashed its drones and missiles on UAE\u2019s oil and gas complex, an offensive that seemed unimaginable before the U.S.-Israeli attacks\u2014even though the Emirates had antagonized Iran by courting both nations, and joining the Abraham Accords in 2020. Iran inflicted severe damage on at least five major UAE facilities, including a drone strike that ignited fires at Ruwais, one of the world\u2019s largest refineries, and another at the key Port of Fujairah oil export hub. While the UAE still manages significant shipments via its pipeline to the Gulf of Oman, the war has crippled its freedom for moving crude and gas from its wells to the world markets.<\/p>\n

\u201cThe problem\u2019s gone from a long-term decline in the real price, to the possibility that in the future, they won\u2019t be able to sell all, or can only sell much less, because Iran controls the Strait of Hormuz, or periodically takes out part of its infrastructure,\u201d says Hanke. The upshot: The UAE\u2019s discount rate soared overnight. The new math dictates that the that the \u201cpresent value\u201d of oil produced in the future will be much lower than before the war. In other words, any opportunity to go, go like hell. \u201cThe UAE now has a big incentive to tilt oil production towards the present and away from the future,\u201d says Hanke. Leaving OPEC and its quotas opens that door. This war\u2019s full of unforeseen consequences. None bigger than the bombshell on April 28 that this OPEC stalwart for nearly sixty years is bolting.<\/p>\n

The Fortune 500 Innovation Forum<\/strong> will convene Fortune 500 executives, U.S. policy officials, top founders, and thought leaders to help define what\u2019s next for the American economy, Nov. 16-17 in Detroit. Apply here<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"The decision was shocking. But the announcement April 28 that the UAE was leaving OPEC caps years of…\n","protected":false},"author":2,"featured_media":459434,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[174],"tags":[79,179,18,45760,1259,81460,19,18929,17,13149,202169],"class_list":["post-459433","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-eire","tag-energy-industry","tag-energy-prices","tag-global-business","tag-ie","tag-iran","tag-ireland","tag-opec","tag-opec-oil-output"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ie\/116487397601723452","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/459433","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=459433"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/459433\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/459434"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=459433"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=459433"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=459433"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}