On Wednesday, the United Arab Emirates said that it will exit OPEC and OPEC+, the world’s largest oil-producing alliances that account for roughly 40–50% of global output and influence prices through production quotas, effective May 1.
The UAE is not the first to leave the group. Countries such as Qatar, Ecuador and Angola have exited in recent years, often citing dissatisfaction with quotas or changing national priorities. Angola left in 2024, while Qatar ended its membership in 2019.
OPEC, made up largely of Gulf oil exporters, has historically shaped crude prices by adjusting output and allocating quotas among members. It also played a central role during the oil crises of the 1970s, which reshaped global energy policies.
Why has the UAE decided to step away?
The UAE’s departure comes at a time when OPEC is already dealing with internal strains.
While Saudi Arabia dominates OPEC production, the UAE holds the second-largest spare capacity, making it a key swing producer capable of raising output to stabilize markets. This very position appears to have prompted a rethink. The UAE has invested heavily in capacity and wants to utilise it more fully.
However, OPEC quotas capped its production at around 3 to 3.5 million barrels per day, limiting its ability to maximise output. As a result, the UAE was bearing a disproportionate share of the revenue sacrifice required under the group’s framework.At the same time, OPEC has struggled with uneven compliance, with some members, including Iraq and Kazakhstan, historically exceeding their quotas. Members such as Iran, Libya and Venezuela are exempt from quotas due to sanctions or conflict, making coordination more difficult.
Domino effect soon?
Analysts say other countries could also reconsider their membership. Kazakhstan, which has significantly overproduced in the past year, could view this as an opportunity to exit. Nigeria is another potential candidate. As Africa’s largest oil producer, Nigeria has increasingly shifted focus toward domestic refining, particularly through the Dangote refinery.
This allows it to process more crude locally, capture higher-value fuel margins and reduce dependence on exports, weakening its incentive to remain bound by OPEC limits.
Now what?
The timing of the exit may limit immediate damage. With oil prices already high and supply constrained due to disruptions linked to the Strait of Hormuz, markets are tight. Experts say once the strait reopens, demand could rise further as countries rebuild depleted reserves, keeping prices elevated.
Without the UAE, OPEC’s strength would weaken, as meaningful spare capacity has largely been concentrated in Saudi Arabia and the UAE.
In the near term, the impact may remain limited. Ongoing tensions between the US and Iran have curbed exports from the Persian Gulf, forcing producers such as the UAE, Saudi Arabia and Iraq to cut output.
Jorge Leon of Rystad told Reuters that the UAE’s exit marks a significant shift for OPEC. Alongside Saudi Arabia, it was among the few members with meaningful spare capacity, which is central to the group’s ability to influence markets.
While short-term effects may be muted due to current disruptions in the Strait of Hormuz, he said the longer-term impact could be a structurally weaker OPEC. Outside the group, the UAE would have both the incentive and flexibility to increase production, raising concerns about the sustainability of Saudi Arabia’s role as the primary market stabiliser and pointing to a more volatile oil market over time.
According to the International Energy Agency, the UAE had around 660,000 barrels per day of idle capacity, although some analysts and traders believe the country may already be operating close to its maximum output.
Oil prices pushed higher on Thursday, rising as much as 7% to cross the $125 mark as concerns grew over a prolonged U.S. blockade on Iranian exports and a lack of progress in nuclear negotiations, raising the likelihood of tighter supply conditions ahead.
Brent prices have now reached their highest levels since mid-2022 as tensions in the Iran war continue to disrupt supply flows through the Strait of Hormuz.
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