On April 28, the UAE delivered a shocker by announcing its exit from OPEC, the oil producers’ group that acts as a central, inter-governmental stabiliser in global oil markets, coordinating production policies among its 12 member countries to balance supply and demand, and influence crude prices. UAE’s move comes at a time when the Middle East’s oil economy is facing severe disruption due to the ongoing US-Iran war.
As per analysts, the high-profile exit, which weakens OPEC’s control over global oil supplies, should be seen as a by-product of the widening rift between the UAE and Saudi Arabia over OPEC’s policies.
UAE Energy Minister Suhail Mohamed al-Mazrouei, while interacting with Reuters, said that Abu Dhabi took the decision after examining its energy strategies. He sees the UAE being perfectly positioned to meet growing global energy demand in the coming days.
OPEC Puts Up A Strong Response
OPEC’s Gulf members are already finding it hard to ship exports through the Strait of Hormuz, a chokepoint between Iran and Oman through which a fifth of the world’s crude oil and LNG normally pass, due to the ongoing war. With Gulf supplies shrinking, OPEC+’s share of global oil output fell to 44% in March from about 48% in February.
Post UAE’s exit on May 1, OPEC+ convened a meeting on May 3, where it agreed to go for a modest oil output hike for June. Seven OPEC+ countries will raise oil output by 188,000 barrels per day in June, the third consecutive monthly increase, the same ratio that was agreed for May minus the UAE’s share.
While interacting with Reuters, former OPEC official Jorge Leon, also an analyst at Rystad, summed up the developments thus: “OPEC+ is sending a two-layer message to the market: continuity despite the UAE’s exit, and control despite limited physical impact. While output is increasing on paper, the real impact on physical supply remains very limited given the Strait of Hormuz constraints. This is less about adding barrels and more about signalling that OPEC+ still calls the shots.”
Saudi Arabia, the top contributor in OPEC+, will raise its quota to 10.291 million bpd in June under the agreement, far above actual production. The Kingdom reported production of 7.76 million bpd to OPEC in March 2026. With the UAE’s departure, despite having 21 members, including Iran, the burden of increasing the supply flow will rest with the ‘Big Seven’ (Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia, and Oman)
Another hurdle is the Strait of Hormuz. Even if the Iran war stops, and the strategically important Strait reopens, it will take several weeks, if not months, for energy flows to normalise. The ongoing energy supply disruption has propelled oil prices to a four-year high above USD 125 per barrel.
The industry also anticipates widespread jet fuel shortages, along with a spike in global inflation. American budget carrier Spirit Airlines ceased operations following an increase in jet fuel prices.
United States President Donald Trump welcomed the UAE’s move to pull out of OPEC, stating it could help lower oil prices.
“I think, ultimately, it’s a good thing for getting the price of gas down, getting oil down, getting everything down. They’re having some problems in OPEC,” he remarked.
Russian Finance Minister Anton Siluanov said, “Today,we hear that one of the countries, the United Arab Emirates, is leaving OPEC. What does this mean? It means that the country can produce as much oil as its production capacities allow, and release it onto the market. If OPEC countries conduct their policies in an uncoordinated manner (after the UAE exit), and produce as much oil as their production capacities allow, and as much as they want, prices will go down accordingly”
The Price Dynamics
Credit rating firm Fitch sees no change in the UAE’s oil production metrics in the post-OPEC world, with oil revenues getting boosted in the longer term. As per Paul Gamble, Fitch’s head of Middle East sovereign ratings, Abu Dhabi will likely increase exports once the Strait of Hormuz opens, given the fact that it won’t be handicapped by OPEC’s output-related decisions.
“That would help its balance sheet, although diversifying the economy away from oil and an improvement in the geopolitical risks are still likely to be needed to lift the UAE’s AA- stable credit rating,” he told Reuters.
Goldman Sachs stated that OPEC faces a greater upside risk to oil supply over the medium term than in the short term.
“The effective closure of the Strait currently limits UAE output. However, the exit implies upside risk to the bank’s base case that UAE crude production recovers to 3.8 million barrels per day by October 2026, compared with 3.6 million bpd before the war,” the bank stated.
As per Goldman, its base case assumes cumulative Gulf crude production losses of 1.83 billion barrels by December 2026, due to the UAE’s exit, with global oil inventories requiring replenishment once the trading activities around Hormuz normalise.
Barclays’ prediction sees faster oil supply growth from the UAE, once the situation normalises in the Middle East, while ANZ sees the near-term impact of Abu Dhabi’s detachment from the cartel having a limited effect as prices are still being driven more by geopolitics, inventories and logistics than by institutional changes.
HSBC envisions both OPEC and OPEC+ dealing with weak supply discipline and price‑management ability from now on.
“The loss of UAE participation could also raise the risk of compliance slippage among remaining members. If collective discipline weakens, OPEC+ may struggle to manage prices during periods of softer demand or rising non‑OPEC supply,” it predicted.
It Is Advantage UAE
Abu Dhabi’s crude oil pipeline allows exports to bypass Hormuz by carrying crude to the port of Fujairah (which recently got attacked by Iran), with the latter possessing the capacity of transporting up to about 1.8 million barrels per day. As per HSBC, once the Hormuz situation improves, the UAE will have the dual advantage in the form of Fujairah and Hormuz, which, in turn, will result in the Gulf major not only steadily raising output, but also cashing in on the growing global demand.
As per the British bank, the Abu Dhabi National Oil Company (ADNOC) could lift production to more than 4.5 million barrels per day, compared with an OPEC+ quota of about 3.4 million bpd for the May 2026 period.
“Any increase in supply is expected to be spread over 12 to 18 months rather than delivered immediately, in line with ADNOC’s stated intention to raise output gradually, and according to demand and market conditions. Additional UAE barrels would help rebuild depleted global oil inventories after recent draws,” HSBC remarked.
“Over the longer term, the departure of a core Gulf member could undermine OPEC+ cohesion and credibility, making supply management more difficult to enforce. The UAE’s expanding production capacity and long‑term investment plans, including a $150 billion programme through 2030, suggest an intention to monetise reserves with fewer output constraints,” it added.
OPEC was founded in 1960 to ‘harmonise the petroleum policies of its member countries as part of its efforts to safeguard their interests’. The UAE joined OPEC in 1967 as the Emirate of Abu Dhabi. By 2026, the UAE had consolidated its position within the block as the third-largest oil-producing member, after Saudi Arabia and Iraq.
OPEC+, on the other hand, is a larger group of oil-producing countries (including Russia) that works together with OPEC to set energy policy. While the bloc’s goal was to collectively agree on and set production quotas for its member countries, it also ended up influencing global oil prices.
OPEC is known for its practice of collectively limiting and expanding the global supply of oil in the market (even dictating the price). The group was a battlefield with Abu Dhabi, throughout the years, pushing for a higher production quota within OPEC+. Its daily quota of about 3.2 million barrels sat well below its sustainable capacity (closer to 4.85 million).