The Persian Gulf conflict is dragging on with renewed military clashes in the Strait of Hormuz for the past two days. Engulfed by the fear of continued supply disruption, the oil market reacted with higher prices, with Brent going to $115 a barrel and European gas rates reaching the highest level since mid-April.

Without a genuine ceasefire, shipping traffic along this transport route, so crucial for the world energy market, will not normalise anytime soon. In other words, the risk of energy price swings remains high.

UAE exit adds fresh complexity to oil market

Meanwhile, the United Arab Emirates’s (UAE’s) decision to exit the oil cartel OPEC has added another dimension to the complexity. At a recent virtual meeting, the seven OPEC countries refrained from commenting on the UAE decision.

In recent years, the UAE has been consciously seeking to reduce its dependence on oil export revenue by diversifying into non-oil economic activities, partially triggered by global consensus on energy transition that meant moving away from polluting fossil fuels towards renewable energy.

When seen from this perspective, the UAE’s decision to sever its........

© Free Press Journal