UAE quits OPEC as the cartel weakens — what does it mean for oil prices?
Last week, Brent crude temporarily climbed to its highest level since the start of the direct US–Iran ceasefire. The more consequential development for the long-term, however, was the United Arab Emirates’ surprise announcement that it would leave OPEC, which it did on 1 May. While the short-term impact will be limited — not least because the Strait of Hormuz remains blocked — the move points, over time, to lower oil prices and, potentially, greater volatility.
Within OPEC, the UAE was a heavyweight: the group’s third-largest producer, with roughly a 13 per cent share of total production capacity. At present the country is pumping about 1.9mn barrels a day, around 1.5mn b/d less than before the war. Its overall capacity is higher still — roughly 4.3mn b/d — and is expected to rise to 5mn b/d by 2027.
This is where the first fault line appears. For years, the UAE has chafed at OPEC’s tight production curbs, set under the direction of Saudi Arabia, the cartel’s de facto leader. The Emirates sit among the lowest-cost producers in the world. And rather than prioritising higher prices — which has been Riyadh’s focus in recent years, hence the group’s collective restraint — Abu Dhabi has increasingly favoured maximising output and gradually expanding market share.
Tensions have been sharpened further by the current conflict involving Iran. In response to a barrage of drone and missile strikes, the UAE has adopted a hard line towards Tehran and has been openly critical of what it sees as Saudi passivity. By signalling higher planned output, Abu Dhabi is also aligning itself with US President Donald Trump, who has long had the cartel in his sights. Behind the scenes, the ongoing discussion over a dollar swap line between Washington and Abu Dhabi may also have played a part.
The UAE has left OPEC after almost 60 years — and it is not the only member to have walked away in recent years. Qatar exited in 2019, Ecuador a year later, and Angola in 2024. This departure, however, is by far the most significant blow to the group’s heft. Is it the beginning of the end? That is premature. The key question is whether other producers will follow.
Historically, OPEC’s influence has hinged on two things: its willingness — and its ability — to cut production when required. With the Emirates’ exit, both look weaker. Over time that could translate into cheaper oil, but also into a looser grip on supply management — and, as a result, higher price swings.