The United Arab Emirates said it will leave OPEC effective May 1, a move it described as part of a broader strategic push that could further erode the cartel’s ability to steer global oil supply and prices. The UAE announced the decision in a Tuesday statement carried by the state-run WAM news agency, and analysts said the change removes one of OPEC’s biggest producers and one of the group’s faster ramp-up options.
The UAE’s exit follows years of signals that it was willing to resist OPEC production quotas. The UAE had pushed back in recent years against quotas it felt were too low for its ambitions to sell more oil, and it has expanded energy production capacity in recent years as part of that broader approach. In an analysis quoted in the report, Capital Economics said the UAE had “been itching to pump more oil” and that the “ties binding OPEC members together have loosened,” pointing in particular to Qatar’s withdrawal from the cartel in 2019.
While the UAE’s departure formally takes it out of OPEC, the decision also came as global oil markets remained heavily influenced by the war in Iran. The report said supplies are sharply constrained because Iran’s war has closed the Strait of Hormuz, a route that carries about one-fifth of global oil supplies, including much of the UAE’s. It also noted that Brent crude traded above $111 a barrel on Tuesday, more than 50% above its prewar price.
In that context, analysts cited in the report said the UAE’s withdrawal would not necessarily cause an immediate shift in markets because of the larger supply disruption from the Iran-related conflict. OPEC accounts for roughly 40% of the world’s oil output, but its market power has been waning as the United States has ramped up production. The report said Saudi Arabia was producing more than 10 million barrels a day before the war, while the U.S. pumps more than 13 million barrels a day.
The UAE’s own position, as presented in its announcement, tied the exit to “long-term strategic and economic vision and evolving energy profile,” including “accelerated investment in domestic energy production.” The UAE also said it would add “additional production to market in a gradual and measured manner, aligned with demand and market conditions.” Jorge Leon, head of geopolitical analysis at Rystad Energy, said the departure removes “one of OPEC’s few members with the ability to quickly increase production,” and he warned that a structurally weaker OPEC with less concentrated spare capacity would find it harder to calibrate supply and stabilize prices.
Beyond economics, the report said regional politics may be part of the backdrop. It described increasingly frosty relations between the UAE and Saudi Arabia, OPEC’s largest producer, citing disagreements in the Middle East even after both countries were attacked by Iran, another OPEC member during the war period. The report said the UAE and Saudi Arabia had jointly fought Yemen’s Iran-backed Houthi rebels in 2015, but that their coalition unraveled into recriminations in late December after Saudi Arabia bombed what it described as a weapons shipment bound for Yemeni separatists backed by the UAE.
The report also described the UAE sending its foreign minister rather than its ruler to a Gulf Arab leaders’ meeting Tuesday in Jeddah, hosted by Saudi Crown Prince Mohammed bin Salman. It noted that Saudi broadcasters based in Dubai, the UAE’s economic hub, have pulled back to the kingdom in recent months, and it said analysts viewed the OPEC exit as aligning with the UAE’s need for more flexibility with key energy consumers, including in a possible future relationship with China and a more competitive dynamic with Saudi Arabia.
UAE Energy Minister Suhail al-Mazrouei told CNBC that the decision did not stem from any dispute with Saudi Arabia, saying, “We’ve been working together for years and years. We have the highest respect for the Saudis for leading OPEC.”