00:00Shock waves have rippled through global oil markets after the United Arab Emirates announced it will withdraw from OPEC and
00:07OPEC Plus on the 1st of May.
00:09It's a major blow to the 66-year-old cartel, with the UAE among its biggest producers.
00:16The Gulf state said the move was driven by national interest, citing what it described as unprecedented circumstances.
00:22The UAE faces regional tensions with Iran, alongside disruptions in the Strait of Hormuz that have constrained key oil exports.
00:31Let's talk to Jonathan Lamb. He is an oil and gas analyst at Wooden Company.
00:35Great to have you on Global Business Europe. So why has the UAE quit OPEC now?
00:43It's a little difficult to say why now, but there have been a matter of, they've been having disputes with
00:53Saudi Arabia over a number of different issues.
00:56But from the perspective of oil production, the UAE wants to increase its capacity to 5 million barrels per day,
01:06which would be a substantial investment.
01:08And if they're still a member of OPEC, they can't necessarily use that extra capacity.
01:14So in the long term, they want to produce more oil.
01:18And in the short term, what is this all going to mean for oil prices?
01:24Well, in the short term, they are restricted by the fact that they can't ship their oil through the Strait
01:31of Hormuz.
01:32They can only take it outside on the Fujairah pipeline, which only has capacity of one and a half million
01:39barrels per day.
01:40So I think in the short term, the answer is it doesn't change anything.
01:44This is more of a long term policy.
01:46And what about OPEC itself?
01:49Is it now facing a structural crisis?
01:52Is it the beginning of the end?
01:56Well, I think many people have written OPEC off before.
02:01But perhaps where this is different from some of the issues they faced in the past is that the UAE
02:07is very much a core member of OPEC.
02:10They're seen as one of the pillars of the organization.
02:14So it does create a huge challenge for the rest of OPEC members and for the de facto head of
02:20OPEC, which is Saudi Arabia.
02:23Jonathan, thanks for that.
02:24Stay where you are, because I do want to talk to you about BP.
02:27But I want to talk our viewers through the numbers first of all, because they've announced this huge jump in
02:32profits with oil prices soaring from the war in the Middle East.
02:35In the last three months of 2025, the energy giant made just over $1.5 billion.
02:42But in the first quarter of this year, profits have more than doubled to $3.2 billion.
02:47That's way ahead of expectations.
02:50BP says it's down to exceptional performance in oil trading.
02:55New chief executive Meg O'Neill saying the company has worked hard to supply fuel under challenging circumstances.
03:01But campaigners accuse the group of profiting from war, with words like astronomical, horrifying or obscene, and many calling for
03:11higher taxes on oil firms.
03:14Let's bring our guest back in, Jonathan.
03:16Good to have you still here with us.
03:20So BP says it's down to this exceptional performance here.
03:27But that it hasn't fully benefited from higher oil prices just yet.
03:31I mean, are these profits really about producing oil or about making money from market chaos?
03:38Well, if we remember, we're talking about the first quarter here.
03:42And it was only in March that the prices really shot up when the conflict started and the Hormuz was
03:49closed.
03:51So, in a sense, yes, the average price of oil and gas in the first quarter was not nearly as
03:57high as the current prices are.
04:00And if we look at the details of their profits, there's a big part of that is coming from oil
04:05trading.
04:07And typically, traders of any kind, if they're good at what they do, can make a lot of money when
04:12there's volatility.
04:13And it seems to me that that's what BP has done.
04:16But if big oil is this profitable in a crisis, does it undermine the urgency to shift to renewables and
04:25undermine the policies and the strategy of big companies like BP when it comes to the green transition?
04:35Well, for BP and oil companies like BP, in a way it does.
04:40We've seen in recent years that BP has struggled when it comes to the renewables business.
04:47And now, all of a sudden, they're making a lot more money from their core oil and gas legacy business.
04:55But from the perspective of society, perhaps it does the opposite.
04:59So, perhaps we'd benefit more from investing in renewables and not relying quite so much on oil and gas.
05:07So, big oil and oil traders, as you say, are making lots of money out of all of this volatility.
05:13But what about consumers?
05:14Because if prices stay high, I mean, what does it really mean for motorists, for people who want to take
05:20flights, for people who use this oil?
05:22Are we locked into paying more, longer?
05:26Well, currently, yes.
05:27Unless the conflict comes to an end and we see a normalization of oil flows, it's impossible to see prices
05:35going down from here very substantially.
05:39And so, we are locked into higher pump prices, into higher prices for airline tickets.
05:44And it may well surprise people, but when the price of oil rises this quickly, very often the price of
05:53the pump is not fully reflecting the increase in the underlying costs.
05:58So, margins in retail can actually be lower during periods like this.
06:04And then if the price remains high for a period of time, those margins will catch up.
06:09So, we may even have to pay more when we fill up our cars.
06:13Oh, I really hope not, Jonathan, but it seems that the writing is on the wall.
06:16Jonathan Lamb at Wooden Company, thank you very much.
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