The World Still Thirsts for Oil: The Impact of the UAE's Exit from OPEC

The United Arab Emirates (UAE) has officially left OPEC on Friday this week (1/5/2026). This step comes as the global oil market faces geopolitical pressures, particularly following shipping disruptions in the Strait of Hormuz. The price reaction on the first day was relatively calm. However, from a market structure perspective, this decision carries significant weight.

OPEC’s monthly report estimates global oil demand at 105.7 million barrels per day in the first quarter of 2026.

In the second quarter of 2026, global needs are projected to remain high at 105.1 million barrels per day. The largest consumption still comes from the United States at around 20.5 million barrels per day, followed by China at 17.2 million barrels per day and India at 5.9 million barrels per day. The world remains energy-thirsty.

On the supply side, OPEC notes that its crude oil production fell to 25.9 million barrels per day in the first quarter of 2026, down from an average of 27.6 million barrels per day throughout 2025. This means that while global demand remains high, the cartel is supplying less oil to the market. In such a phase, every additional barrel holds great significance.

The UAE is not a minor member and is part of OPEC’s major producers alongside Saudi Arabia, Iraq, Iran, and Kuwait. However, the UAE’s weight extends beyond daily production figures. Its strategic value lies in its spare capacity that can be mobilised at short notice.

Spare capacity refers to unused production that can be quickly ramped up when the market faces supply shortages. According to Rystad Energy analyst Jorge León in an interview with CNBC International, the UAE ranks second after Saudi Arabia in terms of spare production capacity within OPEC. Together with Saudi Arabia, they control the majority of global spare capacity, estimated to exceed 4 million barrels per day.

According to Trading Economics, UAE crude oil production fell to 1,908 thousand barrels per day in March 2026, down from 3,390 thousand barrels per day in February 2026.

Throughout 2025, UAE oil production reached 3.8 million barrels per day.

Historically, UAE crude oil production averaged 2,237.44 thousand barrels per day from 1973 to 2026. The all-time high was recorded in April 2020 at 4,033 thousand barrels per day, while the lowest level occurred in August 1984 at 990 thousand barrels per day.

This means that when wars break out, sanctions are imposed, or other countries’ production drops suddenly, these two nations have the ability to add barrels to the market quickly. Such instruments have long been one reason why OPEC remains relevant. The cartel does not just discuss quotas but also has the capability to calm markets during crises.

With the UAE’s exit, OPEC loses one of its most important reserve engines. Saudi Arabia still holds significant influence, but its room for manoeuvre narrows. If global supply is disrupted, the additional burden will fall more heavily on Riyadh. If the market is oversupplied with oil, coordinating production cuts could become more complicated with one major player outside the organisation.

For Saudi Arabia, this is also a matter of leadership. In recent years, Riyadh has shouldered the largest production cuts to support oil prices. That role was effective with support from other major members. With the UAE gone, Saudi Arabia’s ability to direct OPEC’s rhythm weakens, though it is not yet lost.

From Abu Dhabi’s perspective, Energy Minister Suhail Al Mazrouei stated that the UAE seeks greater freedom in determining its production policy.

The country targets a capacity of 5 million barrels per day by 2027. With such an ambitious target, quota restrictions are seen as hindering the monetisation of upstream investments planted over many years.

There is also the factor of regional tensions. Attacks on ships and escalating conflict with Iran are pressuring export flows through Hormuz, a vital route for Gulf economies. Although the UAE does not officially link its exit decision to the war, the timing of the announcement amid the crisis provides strong context that supply security is now a top priority.

In the short term, the market is unlikely to change drastically. As long as Hormuz remains disrupted, traders will focus on daily distribution risks. However, once the conflict subsides, new scenarios open up. The UAE could ramp up production more aggressively, utilising spare capacity that has been held back, and capture market share in Asia. Such additional supply could pressure global oil prices.

Yet there remains the risk of volatility. When global demand weakens, markets usually rely on OPEC coordination to prevent price collapses. With the UAE outside the organisation, collective discipline becomes more fragile. Prices could move more sharply, rising when supply is disrupted and falling quickly when excess barrels enter the market.