Gulf within: On the UAE leaving OPEC

The UAE has withdrawn from the Organization of the Petroleum Exporting Countries (OPEC), a cartel that it joined in 1967, and OPEC+. It was OPEC’s fourth-largest producer (3.12 million barrels per day) and its third-largest exporter (2.88 mbd) in 2025, behind Saudi Arabia and Iraq. The Emiratis clearly sought to free themselves of production constraints set largely by the cartel’s dominant producer, Saudi Arabia. With significant spare capacity, the Emiratis believe that they are better off with the autonomy to ramp up exports, a capability now constrained by the de facto closure of the Strait of Hormuz, the largest disruption to oil supply in history, following U.S.-Israel attacks on Iran. Brent crude prices barely budged on the announcement, revealing how heavily the Strait crisis weighs on the market. But once the UAE weathers this crisis, whether through the Strait’s reopening, or by routing more crude through a pipeline bypassing Hormuz, analysts estimate that it could lift production by roughly a million barrels a day. While Saudi Arabia, OPEC’s bellwether, has remained chary of over-supply and sought to keep prices high, the UAE has long pushed for higher production for revenues that it intends to funnel into AI infrastructure and other diversification projects.

Unsaid in the UAE’s move is also its frustration with what it sees as a lack of cartel-wide coordination in responding to Iran’s missile and drone attacks on Gulf oil and military facilities; Iran is also an OPEC member. The Emiratis have also differed sharply with the Saudis on external interventions: in Yemen and Sudan. The UAE also seeks closer ties with Israel than most Gulf states, which remain uncomfortable with any thaw given Israel’s genocidal actions in Gaza and its attacks on Iran and Lebanon. The U.S., a non-OPEC member, and the world’s largest oil producer at 13.6 mbd, has long viewed the cartel’s price-setting unfavourably, and President Donald Trump has repeatedly pressed it to pump more. The UAE perhaps calculates that aligning with Washington will yield benefits for its production and pipeline ambitions, though Mr. Trump’s transactional and mercurial foreign policy offers little guarantee. The UAE’s exit also reflects a structural issue: OPEC’s share of global crude dropped to 36.7% in 2025, and with Hormuz shut, pricing power has shifted to American producers in the short term. OPEC will continue, but with a reduced ability to set prices. For net oil-importing countries such as India, however, the immediate threat is not the cartel’s unravelling but the “double blockade” in the Strait of Hormuz and the fragile Iran-U.S. ceasefire. Unless a new geopolitical détente emerges between Iran and the Gulf states, volatility will persist, threatening energy security regardless of what unfolds within OPEC.