The United Arab Emirates' Exit from OPEC+ and Its Implications for Indonesia

1 May 2026 will mark a pivotal moment in global economic and political history, as one of the main pillars of the world’s energy architecture, the United Arab Emirates (UAE)—a Middle Eastern oil giant with a production capacity of 4.8 million barrels per day—officially withdraws from the Organisation of the Petroleum Exporting Countries (OPEC) and the broader OPEC+ alliance.

The surprising announcement broadcast by the UAE’s official news agency, Emirates News Agency (WAM), at the end of April reflects a shift in domestic policy as well as a geopolitical realignment in energy that will send shockwaves across the world.

This historic decision represents the most vulnerable moment for the global economy. The world is currently gripped by a historic energy shock triggered by the escalation of conflict between the United States, Israel, and Iran.

Amid threats of a blockade in the Strait of Hormuz—a narrow chokepoint through which one-fifth of the world’s crude oil supply passes—the UAE’s exit from the world’s most powerful oil cartel shatters the illusion of stability that OPEC has tightly maintained.

For net oil-importing countries like Indonesia, this moment serves as a high-level wake-up call. It raises multidimensional questions about its impact on Indonesia’s macroeconomic architecture, fiscal policies, and future energy strategies.

Why is the UAE Leaving OPEC?

OPEC was founded at the Baghdad Conference in September 1960 by five major producing countries: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Its primary goal was to regain control over their natural resources from the grip of the “Seven Sisters” (seven Western oil companies that monopolised prices).

Since joining through the Emirate of Abu Dhabi in 1967 (and as a unified state in 1971), the UAE has always been a vital core member, contributing to OPEC’s strength, which currently controls about 30 per cent of global supply, and 41 per cent when combined with Russia and others through the OPEC+ framework since 2016.

So, why has the UAE chosen to exit? The official reasons given by UAE Energy Minister Suhail Mohamed al-Mazrouei revolve around “strategic and long-term economic vision,” an “evolving energy profile,” and prioritising “national interests.” There are two main driving forces behind these reasons: long-term economic calculations and intensifying regional geopolitical frictions.

First, Economic Calculations and the Threat of Stranded Assets. The world is moving towards a green energy transition. Global oil demand is projected to peak within the next one to two decades. The UAE, along with Saudi Arabia, is one of the few OPEC members with vast spare capacity but very low extraction costs.

OPEC’s production quota system, designed to withhold supply to keep prices high, is now viewed by Abu Dhabi as a cage. Rystad Energy, an energy research firm, captures the essence: “With demand approaching its peak, the calculations for low-cost producers are changing rapidly, and waiting your turn in the quota system starts to look like leaving money on the table.”

Thus, the UAE wants to pump its oil now, monetise its vast reserves before oil loses value in the post-carbon era, and use the fresh funds to finance its economic diversification.

Second, Geopolitical Frictions and Diverging Foreign Policies. The UAE has progressively become more isolated from its OPEC peers, particularly the de facto leader, Saudi Arabia. Abu Dhabi has carved out its own sphere of influence in the Middle East and Africa. The peak of this split is evident in the UAE’s assertive foreign policy.

Unlike Riyadh, the UAE has multiplied its ties with the United States and normalised relations with Israel through the Abraham Accords in 2020. The UAE views relations with Israel as a critical lever for regional influence and a unique channel to Washington.

This has become even more crucial after the region was hit by the US-Israel war against Iran. Abu Dhabi needs high-level security guarantees, and this move signals that they prefer to be under the Western strategic umbrella rather than tied to the illusory solidarity of Gulf oil producers.

Friction with Saudi Arabia has also occurred on military and economic fronts. The two countries were once in a coalition to combat Houthi rebels in Yemen in 2015. However, that alliance collapsed into mutual accusations, culminating at the end of December when Saudi Arabia bombed what it described as a weapons shipment for UAE-backed Yemeni separatists.

The UAE’s exit leaves a gaping hole in OPEC’s ability to stabilise the market. Historically, during supply crises elsewhere in the world, OPEC has used countries with spare capacity (mainly Saudi Arabia and the UAE) to flood the market with additional oil.

With the withdrawal of the UAE’s 4.8 million barrels per day capacity from the organisation’s control, Jorge Leon, head of geopolitical analysis at Rystad Energy, notes that the market has lost “one of the few remaining shock absorbers.” The heavy burden of stabilising prices now falls almost entirely on Saudi Arabia’s shoulders.

This loss of a strong member—following the exodus of Indonesia (suspended membership), Qatar, Ecuador, Angola, and Gabon in recent years—weakens OPEC’s bargaining position. At the same time, threats in the Strait of Hormuz due to conflicts involving Iran place global oil logistics in the highest uncertainty since the 1970s oil embargo.

Shockwaves for the Indonesian Economy

For Indonesia,