Asian stocks gain and oil prices decline after the UAE says it will exit OPEC

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HONG KONG (AP) — Stocks mostly advanced in Asia on Wednesday despite losses on Wall Street, while oil prices fell after the United Arab Emirates said it would leave OPEC in a blow to the powerful oil cartel.

U.S. futures edged higher.

Markets in Japan were closed for a holiday.

Elsewhere in Asia, South Korea’s Kospi rose 0.3% to 6,657.40 and the Hang Seng in Hong Kong gained 1.4% to 26,029.02. The Shanghai Composite index traded 0.3% higher at 4,091.01.

Australia’s S&P/ASX 200 slipped 0.3%, to 8,689.50.

Taiwan’s Taiex lost 0.6%, and India's Sensex gained 0.4%.

The price of a barrel of Brent crude oil to be delivered in June fell 0.5% to $110.71 early Wednesday. Brent to be delivered in July dropped 0.6% to $103.74. Brent oil was around $70 per barrel before the war began in late February.

Benchmark U.S. crude fell 0.6% to $99.32 a barrel.

The UAE’s departure from OPEC, due to happen on Friday, has been closely watched by oil markets. OPEC accounts for roughly 40% of global oil output, and the UAE is one of OPEC’s largest oil producers. It has pushed back against OPEC production quotas in recent years, wanting to sell more oil to the rest of the world.

“The UAE’s exit will increase (oil) output,” ING Bank strategists Warren Patterson and Ewa Manthey wrote in a research note on Wednesday. “The UAE has been increasingly frustrated over recent years by its output being constrained by OPEC production quotas, which have kept it well below its potential.”

But as U.S.-Iran negotiations for a permanent end to the Iran war stalled and the Strait of Hormuz, where roughly one fifth of the world’s oil passed through before the war, was still largely closed, short term impacts on oil prices will still depend mainly on prospects for reopening the waterway, analysts said.

The UAE was the third largest oil producer within OPEC before the Iran war. ING said its departure “will reduce OPEC’s effectiveness in managing and influencing the global oil market through supply measures.”

Investors are also awaiting more updates on U.S.-Iran peace talks, although limited progress has been made. Iran has offered to reopen the Strait of Hormuz if the United States lifts its blockade on its ports. So far, the U.S. appears to be ruling out a deal that excludes the Islamic Republic’s nuclear program.

The Federal Reserve is expected to announce a decision on interest rates later Wednesday.

On Tuesday, Wall Street retreated from its recent record highs. The benchmark S&P 500 fell 0.5% from its latest all-time high to 7,138.80. The Dow Jones Industrial Average edged down 0.1% to 49,141.93, and the technology-heavy Nasdaq composite dropped 0.9% to 24,663.80.

Artificial intelligence -related stocks led the losses. Chip company Broadcom lost 4.4%, Nvidia fell 1.6% and Micron Technology lost 3.9%. Alphabet, Amazon, Microsoft and Meta Platforms are reporting quarterly results on Wednesday.

In other dealings early Wednesday the U.S. dollar rose slightly to 159.63 Japanese yen from 159.62 yen. The euro was trading at $1.1708, down from $1.1712.

The yield on the U.S. 10-year Treasury remained at 4.35%.

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AP Business Writer Stan Choe contributed to this report.