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The United Arab Emirates has announced it will leave OPEC from the first of May - stripping the oil cartel of its third largest producer.
The Organization of the Petroleum Exporting Countries, as it's known in full, was formed in 1960 as a means of influencing prices by controlling production in member states.
Head of geopolitical analysis at Rystad Energy, Jorge Leon, says there are two main theories about what's behind their leaving.
"The first theory says that the UAE, once the Strait of Hormuz reopens, whenever that happens, wants to have enough capacity to ramp up production and make up for all the losses. That's one theory, very focused on the short term. And the other theory is more focused on the long term, which is that we know that oil demand is going to peak sometime soon, in the next few years, and that it will start decreasing quite fast in the 30s or in the 40s, depending on the outlook. That means that countries have the incentive to monetise resources as fast as possible, those countries that can, and the UAE is one of those countries."
The UAE's exit is expected to weaken the leverage the group of 12 oil-producing nations exercises over global markets, and adds to uncertainty triggered by the war in Iran.
Saudi Arabia is seen as the group's de-facto leader, but relations with the UAE have become more strained in recent years, including through their involvement in military conflict in Yemen.
Jorge Leon says the decision reflects a geopolitical realignment occurring in the Middle East.
"I think in the Middle East, what we're seeing is a realignment, a geopolitical realignment, where Saudi Arabia, Pakistan, Egypt, and Turkey are grouping themselves as the new guarantors of energy security and security in general in the Middle East, while the UAE is linking much closer to India, to Israel, and with the US. And that realignment, geopolitical realignment in the Middle East, is also visible in the fact that the Minister of Energy in the UAE mentioned that Saudi Arabia was not consulted."
In a statement posted to social media the UAE Ministry of Energy and Infrastructure has thanked OPEC countries for decades of constructive cooperation and said the decision to exit represents a response to long-term market fundamentals.
Igor Yushkov is a Senior Analyst at the Russian National Energy Security Fund.
In his view, the UAE's exit is linked to its relationship with the US.
"This could be some kind of behind-the-scenes deal: the United States promised financial assistance to the UAE, which has indeed suffered from the current crisis, and in return the U.S. is asking for help that essentially undermines OPEC+ from within in order to lower prices on the global market. For the United States, and specifically for the Trump administration right now, it is vitally important to bring down oil prices on the global market, because that would lower fuel prices on the domestic US market and reduce political pressure on the Trump's team."
The fracturing of the group is being seen as a win for United States President Donald Trump.
Trump has previously accused OPEC of "ripping off the world" by artificially inflating prices through constraints on production.
"I believe that the collapse of OPEC would be beneficial for the Trump administration, because it would lead to an immediate drop in prices on the global market. Even if the Strait of Hormuz remains closed for now, the very news alone would still push prices down. That would reduce pressure on the Trump administration. On the other hand, over the longer term, if prices stay low, this would also lead to a decline in oil production in the United States. In other words, consumers in the US would benefit, while US producers would lose out. And, of course, lower prices would also be beneficial for oil‑importing countries - European countries and China."
Mr Leon agrees that the US could be a key beneficiary, but he says with the Strait of Hormuz closed, major OPEC countries have limited capacity to ramp up production.
Before the war in Iran, around one fifth of global oil supply was shipped through the Strait, and its effective closure has caused an oil shock the International Energy Agency has described as the worst in history.
As Australia's headline inflation rate surges to 4.6 per cent on the back of rising fuel prices, the fragmentation of OPEC adds to global uncertainty.
Two weeks out from the federal budget, Treasurer Jim Chalmers concedes it's having an impact at home.
"And we've also seen global oil prices spike again in recent days, more than 111 dollars a barrel the last time I looked today, and that will obviously impact prices at the bowser going forward, as well. So we already had an inflation challenge in our economy, we know that, before the conflict - but the tick up in the monthly headline data today was driven by the conflict, and this war could drive inflation up even higher."
