The UAE is set to exit OPEC and the wider OPEC alliance next month, ending nearly six decades of membership in a move that could dramatically reshape the dynamics of the entire global oil market.
Officials in Abu Dhabi said the decision reflects a shift towards prioritising long-term national goals, following major investments to expand production capacity. Outside the quota system, the Emirate will be able to increase output and respond more quickly to changes in global demand.
As per energy analysts, the departure will mark the exit of one of the cartel’s most import and reliable members, as Abu Dhabi alongside Saudi Arabia, is one of the only two nations in the bloc to possess significant spare capacity.
The UAE has been considered a key “swing producer” alongside Saudi Arabia, with the ability to adjust supply to stabilise prices during market shocks, due to its wealth.
Some observers have described the move as “the beginning of the end” for OPEC, pointing not only to the loss of Abu Dhabi as a member, but also to the precedent it may set. If other members decide to follow suit or if major producers including Russia and Saudi Arabia adjust their strategies, the group’s influence over global supply could weaken.
The timing comes amid heightened pressure on oil markets, as the Iran war already greatly disrupted oil and gas flows amid Tehran’s blockade of the Strait of Hormuz – a key route for global crude exports – leading to oil prices rising above USD $110 a barrel, compared with around US$70 before the war.
In the near term, the UAE’s exit is unlikely to translate into an immediate increase in supply, as shipping through Hormuz remains constrained. However, economists say production could rise by up to one million barrels per day over time once logistical conditions improve.
The shift follows years of tension over production limits. OPEC quotas have kept UAE output at roughly 3 to 3.5 million barrels a day, despite investments aimed at raising capacity closer to 5 million.
With relatively low production costs, the UAE is positioned to remain profitable even at lower prices, supporting a strategy focused on higher volumes.
This approach could diverge from that of Saudi Arabia, which has traditionally led efforts within OPEC to manage supply and support higher prices. A split in strategy between the two could contribute to a more fragmented market.
Officials have also explored expanding pipeline capacity from Abu Dhabi to the port of Fujairah, allowing exports to bypass Hormuz and reducing reliance on the chokepoint.
