UAE announces withdrawal from OPEC
The United Arab Emirates (UAE) announced that it will withdraw from OPEC and the broader OPEC+ alliance effective 1 May, stripping the cartel of its third-largest producer.
In a statement, the country’s Ministry of Energy and Infrastructure said that the decision to leave the cartel “followed a comprehensive review of the UAE’s production policy and current and future capacity” and that the move reflect’s the country’s “long-term strategic and economic vision and evolving energy profile, including accelerated investment in domestic energy production.”
The ministry added that, following its exit, the UAE will bring additional production to market “in a gradual and measured manner, aligned with demand and market conditions.”
The UAE joined OPEC in 1967 through the Emirate of Abu Dhabi and continued its membership following the formation of the United Arab Emirates in 1971. The ministry said the decision “does not alter the UAE’s commitment to global market stability or its approach based on cooperation with producers and consumers,” and reaffirmed appreciation for the efforts of both OPEC and the OPEC+ alliance.
Wood Mackenzie called the move “the most significant fracture” in the organization’s 66-year history, and one that increases the risk of oversupply that could weaken prices. According to the consultancy, the UAE accounted for about 14% of OPEC capacity. Even with no change in UAE production policies, OPEC’s stature has been diminished as it exerts influence over a smaller fraction of the global oil market.
“As the nation with the second-largest liquids capacity in OPEC, the UAE’s exit is momentous. However, it’s not entirely surprising as political tensions between the UAE and Saudi Arabia have been building over the last few years and have intensified in recent months amid the ongoing conflict in Iran,” said Simon Flowers, Chairman and Chief Analyst at Wood Mackenzie.
He continued: “UAE’s departure from OPEC will have minimal impact on market fundamentals in 2026, even if the Strait of Hormuz reopens. Gulf countries, including the UAE, will take months to return to pre-war production volumes. Beyond this year, losing the UAE will compound OPEC’s challenge to balance the market and increase the risk of oversupply weakening prices.”
Wood Mackenzie noted that the UAE’s exit was more likely to influence supply dynamics in 2027 and beyond. The UAE has the capability to take a growing share of global oil demand, which challenges OPEC’s current policy of unwinding its voluntary cuts. If tensions escalate, competition between the UAE and OPEC for market share could send medium-term oil prices sharply lower.
“The capacity-quota dispute reflects deeper political fractures and tensions between Saudi Arabia, and the UAE have been steadily building,” Mr Flowers said. “The UAE has much lower fiscal oil price breakevens relative to its peers, leaving its economy relatively resilient and better able to sustain a potential period of low prices.”
