UAE Leaves OPEC: Impact on the Gulf, Energy Markets, and Beyond

After decades as a member, the United Arab Emirates (UAE) has decided to leave the Organization of the Petroleum Exporting Countries (OPEC) to focus on 'national interests' and chart its own course. Observers say the move is a significant blow to the Vienna-based OPEC but will not mark its complete demise.

The UAE's decision to leave OPEC comes after years of public discontent with OPEC's policy of limiting member states' output as a way to control prices and stabilize markets.

The country has invested billions of dollars to boost its oil production capacity from 3 million barrels per day to 5 million barrels per day by 2027. As production capacity grew, the UAE sought a larger quota than the one allocated.

The move comes at a particularly difficult time, as the region and the rest of the world grapple with the energy crisis triggered by the US-Israel war with Iran that began on February 28. Tehran retaliated by striking Israel, US military assets, and other infrastructure in Gulf states, while blocking most traffic through the Strait of Hormuz — the waterway through which 20% of the world's crude oil and liquefied natural gas (LNG) supplies from Gulf producers are shipped.

Before the war broke out, the UAE's production capacity had risen to 4.8 million barrels per day, but under the OPEC agreement, it was allowed to extract only 3.2 million barrels per day.

Experts say the UAE's exit from OPEC is unlikely to have an immediate impact on markets, as oil exports from the UAE and its neighbors are currently constrained by Iran's control over the Strait of Hormuz. The UAE can still sell some oil via the port of Fujairah on the Gulf of Oman, bypassing this waterway. Last year, the UAE exported 1.7 million barrels of crude oil and refined fuel via this route.

However, that could change if the conflict ends with a deal between Iran and the US allowing for the resumption of free navigation through the strait. For now, the future remains uncertain as the US continues a naval blockade of Iran's ports and Iran refuses to allow foreign-flagged vessels to pass through the strait. Iran has also hinted at wanting to retain leverage over the strait after the conflict through a toll system.

Analysts say that if traffic returns to pre-war levels, the UAE could bring an additional 1.6 million barrels per day from its spare capacity onto the market, roughly equivalent to 1.5% of global oil supply, enough to create a competitive advantage in world energy markets.

Kingsmill Bond, an energy strategist at the think tank Ember Future, said the UAE's move is wise. 'They are preparing for the post-war period, because demand for oil has now peaked and we are entering a new environment — they want freedom from OPEC constraints,' Bond said, adding that the UAE is preparing for a post-Iran-war world where oil demand declines and OPEC's power to maintain control and discipline weakens.

This strategy contrasts with Saudi Arabia's goal of keeping OPEC members' output limited to sustain high oil prices in the long term.

Mohammad al-Sabban, a former senior Saudi oil advisor, said the UAE's departure from OPEC is a political decision influenced by the West, which has long sought to sow discord within the cartel. US President Donald Trump was famously hostile to OPEC and once accused the cartel of 'bleeding the rest of the world' by inflating oil prices.

OPEC has proven its ability to adapt in the past. Founded in the 1960s by Saudi Arabia, Kuwait, Iran, Iraq, and Venezuela, the organization has weathered many difficulties and exits by Qatar, Indonesia, Ecuador, and Angola. Robin Mills, a non-resident fellow at Columbia University's Center on Global Energy Policy, said: 'OPEC will be less influential than before, but it won't disappear.'

Historically, OPEC sent shockwaves around the world in 1973 when an alliance of Arab member states imposed an embargo on countries supporting Israel. At that time, the group controlled half of the global oil market. Today, as other countries like the US and Norway have become major oil producers, OPEC's market share has fallen to 33%, and the alliance has expanded cooperation with 12 other oil-producing nations through OPEC+.

Some analysts argue that the UAE's exit from OPEC is not solely about markets. According to Anas Abdoun, an international consultant on energy and global affairs, this departure is a clear sign of a deep regional rift between Riyadh and Abu Dhabi — between two incompatible visions of Gulf order. The UAE has suffered more attacks from Iran than any other Gulf state during the current war, and while Saudi Arabia, Qatar, and Oman favor a diplomatic approach, the UAE pushes for more hawkish policies. The UAE was also the first Arab country to normalize ties with Israel through the Abraham Accords in 2020.

Ultimately, Abdoun argues that the 'real loser' from the UAE's decision is 'the idea of the collective capacity of Arab fuel-producing states to shape the global energy order.'