United Arab Emirates

US Defense Secretary Pete Hegseth says ceasefire with Iran remains in place despite growing tensions in the Strait of Hormuz.

Sudan has recalled its ambassador to Addis Ababa, accusing Ethiopia of being behind attacks on Khartoum’s airport. International Crisis Group’s Alan Boswell says the escalation risks making the countries’ internal challenges worse.

Iranian commander says US military attacked two passenger boats, not IRGC vessels, in the Strait of Hormuz on Monday.

Iran has accused the United States of killing five civilians in the Strait of Hormuz, saying its forces attacked passenger vessels in the waterway rather than boats belonging to the Islamic Revolutionary Guard Corps (IRGC) as claimed.

The claim on Tuesday contradicted a statement by US Admiral Brad Cooper, who said Central Command forces had sunk six IRGC vessels that had attempted to interfere with a US mission to escort stranded ships out of the Strait of Hormuz.

US President Donald Trump later put the number at seven boats.

The US operation, dubbed “Project Freedom”, has shaken a fragile ceasefire reached between Iran and the US on April 8 and renewed fears of a return to war.

Iran’s state broadcaster IRIB quoted an unnamed Iranian military commander as saying that Tehran launched an investigation following the US claim of attacks on IRGC vessels.

It said while none of the IRGC vessels was hit, the investigation found that US forces had “attacked two small boats carrying people on their way from Khasab on the coast of Oman to the coast of Iran on Monday”.

The attacks destroyed the boats and killed five civilian passengers, the commander said. The US “must be held accountable for their crime”, the commander added.

There was no immediate comment from the US military.

The violence comes as Trump seeks to reopen the Strait of Hormuz, which Iran has effectively blockaded following the US and Israeli attacks on the country on February 28.

The closure of the vital maritime corridor – through which roughly one-fifth of the world’s energy supplies flow – has sent oil and fertiliser prices surging around the world and prompted fears of a global recession and food emergency.

Iran is now insisting on maintaining control over the Strait of Hormuz and collecting transit fees as reparations for the destruction caused by the US and Israel.

Attacks on UAE, ships in Hormuz

The Iranian military on Monday warned commercial vessels they would “jeopardise their safety” if they attempted to cross the waterway without permission. The military also warned US forces would face attacks if they approached or entered the chokepoint.

Amid the tensions, the United Arab Emirates said Iran launched a drone attack on one of its oil tankers that attempted to transit the strait and said Iranian forces launched 15 ballistic missiles and four drones at its territory.

UAE authorities said the attacks set off a large fire at a major oil refinery in the eastern emirate of Fujairah and wounded three Indian nationals.

A South Korean vessel in the Strait of Hormuz, the HMM Namu, also reported an attack, saying an explosion had caused a fire in its engine room.

Nonetheless, the US military said two US-flagged ships made it through the strait on Monday with the support of navy guided-missile destroyers.

The IRGC denied the claim as “baseless and completely false”, but the global shipping firm Maersk said the US-flagged Alliance Fairfax exited the Gulf via the Strait of Hormuz accompanied by the US military on Monday.

Iran’s Foreign Minister Abbas Araghchi said the events in Hormuz on Monday “make clear there’s no military solution to a political crisis”.

He said in a post on X that peace talks with the US were “making progress” with Pakistan’s mediation and that Washington “should be wary of being dragged back into quagmire by ill-wishers”.

“So should the UAE,” he added. “Project Freedom is Project Deadlock.”

Meanwhile, Trump has renewed his threats against Iran.

He told Fox News Iran would be “blown off the face of the Earth” if they attacked US vessels carrying out Project Freedom.

“We have more weapons and ammunition at a much higher grade than we had before,” he said.

“We have the best equipment. We have stuff all over the world. We have these bases worldwide. They’re all stocked up with equipment. We can use all of that stuff, and we will, if we need it.”

Iran claims its navy forced a US warship to turn back from the Strait of Hormuz as Washington denies any clash, amid rising tensions in the key waterway. The rival narratives come after US President Donald Trump announced Project Freedom, a mission he framed as a humanitarian effort to “free” stranded ships.

Chris Weafer, the CEO of Micro-Advisory Partners, says the UAE’s OPEC exit frees one million barrels of spare capacity. He warns Kazakhstan and Venezuela may follow, leaving OPEC far less influential on global oil pricing.

Oil markets face renewed instability following the United Arab Emirates’ formal exit from the Organisation of the Petroleum Exporting Countries (OPEC) and its wider alliance (OPEC+), announced on Tuesday and taking effect on Friday.

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The move, which ends decades of membership, comes as the global economy continues to reel from the ongoing war with Iran and the blockade of the Strait of Hormuz remains in place.

Investors are currently weighing the potential for higher future output from the UAE against the immediate and acute risks posed to global supply routes, as well as the increased chances that more countries drop out of OPEC and OPEC+.

Following the announcement, markets reacted swiftly as the potential for oversupply from the UAE was priced in. Oil prices fell by between 2% and 3%, particularly in futures contracts a couple of months ahead.

However, the move was just as quickly offset by the risk premium associated with the Middle East conflict and the current halt to US-Iran negotiations.

At the time of writing, US benchmark crude, WTI, is trading above $105 a barrel, while Brent crude, the international standard, is over $112. Both prices are around 4% higher on Wednesday from the UAE announcement low.

The UAE’s decision follows years of simmering tension between Abu Dhabi and Riyadh over production quotas. The UAE has invested over $150 billion (€128bn) in the state-owned Abu Dhabi National Oil Company (ADNOC) to expand its capacity to five million barrels per day.

However, under OPEC’s restrictive framework, much of this capacity remained underutilised, now prompting the government to prioritise its national interest.

The departure of the group’s third-largest producer is a significant blow to the cohesion of the 60-year-old organisation. Maurizio Carulli, global energy analyst at Quilter Cheviot, noted the limitations this exit places on the remaining members.

“Until tanker traffic through the Strait of Hormuz is safe again, OPEC’s ability to stabilise prices is sharply constrained, while US producers have gained outsized influence,” Carulli explained.

While the UAE has pledged to bring additional production to the market in a “gradual and measured” manner, the sudden lack of coordination within OPEC has introduced a new layer of uncertainty.

For the UAE, the blockade served as a final catalyst for its exit. With its primary export route under threat, Abu Dhabi has sought the diplomatic flexibility to forge independent security and trade partnerships outside the traditional cartel structure.

Despite the geopolitical turmoil, energy equities have remained resilient.

According to Carulli, “integrated majors such as BP, Shell, TotalEnergies, ENI, Chevron and ExxonMobil are benefitting from a price uplift that could add 5-10% to operating cash flow for every $10 increase in oil prices.”

Standoff over the Strait of Hormuz

In a separate but related development, the security situation in the Middle East remains precarious despite a fragile ceasefire. Iran has recently offered a ten-point proposal to reopen the Strait of Hormuz.

In exchange for restoring maritime traffic, Tehran is demanding a full withdrawal of the US naval blockade and an end to the current hostilities.

US President Donald Trump, who recently extended the two-week ceasefire mediated by Pakistan, described the latest Iranian offer as “much better” than previous iterations but still did not accept the terms.

Shortly after, Trump posted on social media claiming that Iran is in a dire and desperate condition with no leverage to negotiate.

Washington continues to insist on a permanent settlement regarding Iran’s nuclear programme and an “unconditional” reopening of the waterway before sanctions are lifted.

The impact of this blockade on global energy security cannot be overstated.

“The prolonged closure of the Strait of Hormuz has removed roughly 12% of global oil supply from the market, according to the IEA, a bigger disruption than the Yom Kippur war, the Iran‑Iraq conflict, the invasion of Kuwait or even the fallout from Ukraine,” Carulli highlighted.

The UAE’s decision to quit OPEC to prioritise its ‘national interests’ deals a blow to the oil group already grappling with the challenge of shipping Gulf exports through the Strait of Hormuz. Here’s what we know about why it’s withdrawing and the impact it might have.

The Gulf state is the latest to quit the group, which was created to form a united ⁠front on oil pricing.

The United Arab Emirates has announced its withdrawal from OPEC and the wider OPEC+ framework, removing a core pillar of one of the most influential groups in the energy world.

The Gulf country, with a capacity of approximately 4.8 million barrels per day and significant room to increase output, announced on Tuesday that it would quit the organisation to focus on “national interests”.

The move comes as the US-Israel war on Iran has sparked ⁠an historic energy shock.

Here’s a look the at the organisation’s history and role in the global economy:

When was OPEC established and why?

The Organization of the Petroleum Exporting Countries (OPEC) is a permanent, intergovernmental organisation based in Vienna, Austria, that has the objective of coordinating and unifying petroleum policies among member states.

It was originally created at the Baghdad Conference in September 1960 by five oil-producing founding states, Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.

At that time, global oil markets were dominated by a group of powerful Western oil companies, known as the “Seven Sisters,” which controlled production and set prices.

The broader aim of the founding countries was to assert sovereignty over their natural resources and secure fair and stable prices for petroleum producers, as well as regular supplies to consuming nations.

OPEC currently has 12 members, including, aside from the UAE: Algeria, Republic of the Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, and Venezuela.

According to a statement issued on Tuesday, the UAE’s withdrawal will be effective on May 1, marking the exit of a member that had contributed to the organisation since 1967.

The organisation pursues price stability by setting agreed production quotas for the membership, which together controls about 30 percent of global supply.

Since 2016, OPEC has also cooperated with Russia, Azerbaijan, Kazakhstan, Bahrain, Brunei, Malaysia, Mexico, Oman, South Sudan, and Sudan through its OPEC+ framework, bringing its output to about 41 percent of global supply.

Why did the UAE leave OPEC and OPEC+?

Alongside Saudi Arabia, the UAE is one of the few OPEC members with meaningful spare capacity, which allows the organisation to respond to supply shocks.

However, nations with spare capacity may decide to cash out their reserves rather than use them to adjust the market.

The UAE’s assertive foreign policy approach has progressively isolated it from fellow OPEC members, especially Saudi Arabia, which disagrees with its positions on Yemen and elsewhere.

Abu Dhabi, meanwhile, has been carving out its own sphere of influence across the Middle East and Africa, and has doubled down on relations with the United States and Israel, with which it opened ties in the 2020 Abraham Accords.

It views relations with Israel as a critical lever for regional influence and a unique channel to Washington, especially after coming under attack ⁠during the Iran war.

The UAE is not the first country to leave the organisation. Others to have withdrawn in recent years include Indonesia, Qatar, Ecuador, Angola and Gabon, mainly due to disagreements over output quotas.