The United Arab Emirates’ decision to withdraw from OPEC and OPEC Plus comes as a surprise to the markets. The UAE is not an ordinary member of the oil exporting bloc. It is a founding member and ranks as the third largest producer within the organization after Saudi Arabia and Iraq. The decision will take effect starting May 1.

In its announcement, the UAE said the move aligns with its long term strategic and economic vision and reflects the evolution of its energy sector. It noted that the decision followed a thorough review of its production policy and its current and future capacity, taking into account national interests and the country’s commitment to contributing effectively to meeting urgent market needs.

This comes amid ongoing geopolitical volatility in the near term, including disruptions in the Gulf and the Strait of Hormuz that affect supply dynamics, while underlying trends point to continued growth in global energy demand over the medium and long term.

For years, the UAE has objected to production limits that do not reflect its actual capacity. It is capable of producing more than what OPEC quotas allow, but it adhered to those constraints for a long time out of commitment to collective action. Today, after major investments, the UAE can raise its output to around 5 million barrels per day. This has led it to prefer operating outside OPEC in order to fully capitalize on that capacity.

What consequences for OPEC?

The decision is likely to have negative implications for OPEC. It could encourage other members to consider leaving, especially since some countries, such as Kazakhstan and Iraq, have repeatedly exceeded their quotas and faced pressure to comply. During the COVID 19 pandemic, OPEC and OPEC Plus acted in a coordinated way to stabilize markets and prevent a price collapse.

If not for the current geopolitical conditions, particularly tensions linked to a possible closure of the Strait of Hormuz, the UAE’s decision would have placed significant downward pressure on oil prices.

Increasing production from about 3.3 million to 5 million barrels per day would create additional surplus in the market, especially alongside rising output from non-OPEC producers such as Brazil and Canada.

While the immediate impact may appear limited, with only a slight dip in prices, this relative calm may be temporary due to geopolitical factors. Over the longer term, the UAE appears intent on making full use of its oil resources before global demand is expected to decline by 2050.

Conceptual image indicating OPEC member countries. (Getty)

A Future Advantage for the UAE

Estimates suggest that supply shortages could emerge in the coming years as a result of damage to a large number of energy facilities in the region, with the impact potentially lasting between two and five years. In this context, the UAE’s possession of spare production capacity, combined with relatively limited damage, could give it a relative advantage.

However, once supply and demand return to balance after the crisis ends, this move could become a source of pressure on the market. It may prompt other producers to increase their output or move away from coordinated frameworks, which would create a surplus in supply and put downward pressure on prices.

In general, increasing production outside regulatory frameworks such as OPEC and OPEC Plus is viewed as a negative factor for oil market stability, especially given the rise of major producers outside the organization, such as the United States, which consistently seek to expand their market share.

Keeping Pace with Global Competition

In this light, the UAE’s move can also be seen as an attempt to keep up with global competition, particularly as countries like Mexico and Brazil expand production outside OPEC, while the organization has maintained output cuts for years.

The role of ADNOC, owned by the Abu Dhabi government, is also key. The company is leading major investments in the oil and gas sectors and deploying advanced technologies to boost efficiency and productivity, strengthening the UAE’s ability to benefit from higher prices and increase its revenues.

A diversified economy

It is worth noting that the UAE has made significant progress in diversifying its economy, with more than half of its revenue now coming from non-oil sectors. Its non-oil foreign trade surpassed one trillion dollars in 2025, marking strong growth of 27 percent compared with 2024.

This step can therefore be seen as part of a strategic repositioning that could help reshape the global oil sector in the years ahead.