The United Arab Emirates has decided to leave the Opec group of oil producers after six decades of membership amid an energy supply shock in the Middle East spurred by the US-Israeli war with Iran.

The UAE announced the decision, through the state-run WAM news agency, which will be effective from May 1.

Opec (Organisation of Petroleum Exporting Countries) was founded in Iran in 1960 and aims to co-ordinate production among member countries, stabilise oil markets and keep supply and income steady.

The UAE joined Opec in 1967, and its departure will leave the oil cartel with 11 member countries including Saudi Arabia, Iran and Iraq.

A statement on the WAM news agency read: “This decision follows a comprehensive review of the UAE’s production policy and its current and future capacity and is based on our national interest and our commitment to contributing effectively to meeting the market’s pressing needs.

“While near-term volatility, including disruptions in the Arabian Gulf and the Strait of Hormuz, continues to affect supply dynamics, underlying trends point to sustained growth in global energy demand over the medium to long-term.”

The statement went on to say that following its exit, the UAE would “continue to act responsibly, bringing additional production to market in a gradual and measured manner”.

It has been reported that the UAE has expressed frustrations with production quotas agreed by Opec members in a bid to control oil prices, with the decision also referring to a desire for greater flexibility.

But the announcement comes at a fraught time in the Middle East with the closure of the Strait of Hormuz disrupting oil and gas supplies around the world and sending prices soaring.

David Oxley, chief climate and commodities economist for Capital Economics, said the UAE had been “itching to pump more oil”.

“The UAE’s desire to pump more oil has been placated up to now by a combination of the rest of Opec turning a blind eye to its overproduction and also raising its quota levels,” he said.

The economist suggested that, if energy flows get back to normal once the Strait of Hormuz reopens, then the UAE’s departure from Opec could “feasibly” result in it pumping an additional one million barrels per day – the equivalent of about 1% of global oil demand.

Mr Oxley also warned that the move could trigger other members leaving Opec which would have bigger implications for the global oil market and prices.

There was a fresh blow for Rachel Reeves as government borrowing costs hit the highest level since the financial crash of 2008.

The yield on 10-year bonds – the most widely used benchmark of government debt costs went over 5 per cent on City trading screens.

Sometimes such moves are a blip followed by a fall, but instead they stayed at 5.1 per cent on Tuesday.

The interest rate paid on UK government debt is a sign of confidence in the wider economy; the higher the yield, the more investors are demanding to lend to the government.

Lucy Smith, senior investment manager at investment management firm Killik & Co, said: “Today the 10-year UK gilt yield has risen above 5 per cent for the first time since 2008. This is bad news for Reeves as she attempts to contain government borrowing costs whilst encouraging growth.”

The chancellor was already dealing with rising inflation, up from 3 per cent to 3.3 per cent in the most recent official figures, and has faced speculation that the prime minister may look to remove her in a shake-up of his team.

Retailers are warning of rises in the cost of food and fuel, a further blow to those on the lowest incomes who were already stretched. Local council elections on May 4 are expected to see a Labour battering at the polls.

The International Monetary Fund (IMF) recently revised UK growth forecasts for the year down from 1.3 per cent to 0.8 per cent. Some economists fear she may have to find new tax rises.

Ms Smith added: “The Iran war has caused oil prices to spike, with the price of oil remaining above $100 a barrel, up from around $60 in December. The UK is a net importer of oil, so this increase is likely to create a supply-side inflationary shock, worsening the UK’s inflationary outlook. The combination of higher inflation and lower growth presents a significant challenge for the chancellor and may result in further tax rises or reduced spending in the next budget later this year.”

City insiders say that political instability within the UK government, particularly surrounding the Peter Mandelson vetting inquiry, may have also contributed to rising yields, as instability makes investors less willing to hold government debt.

Some spy opportunities for retail investors, since government debt is guaranteed. Bonds can be bought via all major investment platforms and held in tax-free ISAs.

Alan Miller at investment firm SCM Direct said: “Long gilts at 5 per cent plus are the best deal retail savers have had in years. Wrap it in an ISA, and you keep the lot.”

Ms Reeves has been trying to create so-called “headroom”, which means the UK’s finances remain within the guidance she has given to Parliament. Some experts argue she has handled this well.

Andrew Goodwin at Oxford Economics says: “We calculate that if gilt yields and market expectations for bank rate stay where they are now, it would knock about £7.5bn off the chancellor’s £23.6bn headroom at this autumn’s Budget. But this won’t force the chancellor to take corrective action. Indeed, it demonstrates that her decision to increase headroom at the 2025 Budget was a wise one because it has given her the room to absorb this unexpected shock without having to respond with higher taxes.”

The Bank of England’s Monetary Policy Committee (MPC) meets on Thursday and is expected to hold interest rates at 3.75 per cent.

Before the Iran war, it was widely expected that the Bank would cut rates two or three times this year, leading to lower mortgage costs.

Critics say government policy is as much to blame as global events.

Kallum Pickering, chief economist at Peel Hunt, wrote in a note: “Over the past decade, the UK economy has suffered a succession of policy mistakes and resulting rates of inflation which have consistently exceeded the prevailing trends across other major economies. Unsurprisingly, it no longer takes much to spook UK government debt markets.”