UAE's Exit from OPEC: A 'Blow' to Saudi Arabia?

Why is the UAE deciding to leave OPEC?

OPEC, the global organisation of oil-producing countries, implements a quota system that limits the amount of oil each member can produce.

For years, the United Arab Emirates (UAE) has clashed with Saudi Arabia, OPEC’s most influential member, over this quota system. The UAE has invested heavily in expanding its oil industry and increasing its market share, but OPEC’s restrictions have often hindered it.

UAE Energy Minister Suhail Al Mazrouei told The New York Times on Tuesday (28/4), “The world needs more energy. The world needs more resources, and the UAE wants to be free from the restrictions of any group.”

The UAE is betting that it can sell more oil once the US-Israel war against Iran and the Strait of Hormuz crisis end, both in the medium and long term. Meanwhile, analysts see this move as calculated by oil producers ready to act independently.

“Losing a member with a capacity of 4.8 million barrels per day and ambitions to produce more truly removes a key instrument from OPEC,” said Jorge Leon, head of geopolitical analysis at consultant Rystad Energy. “With demand approaching its peak, the calculations for low-cost producers are changing rapidly, and waiting for turns in the quota system is starting to look like wasting money.”

The UAE, which joined OPEC in 1967, will leave OPEC and the OPEC+ alliance (which includes Russia) on 1 May.

The UAE currently produces around 3.2 to 3.6 million barrels per day (bpd) under the quota but has spare capacity of nearly 4.8 million bpd, as reported by Reuters news agency. Plans are in place to increase production to 5 million bpd next year.

Does the UAE’s exit weaken OPEC and Saudi leadership?

The UAE’s exit removes one of OPEC’s few members with significant spare oil capacity, meaning Saudi Arabia cannot easily share the burden of production adjustments.

This Gulf kingdom has long played a role in managing oil prices by cutting its own production and enforcing discipline across the group. With the UAE’s departure, Saudi Arabia must rely on its own production cuts to stabilise prices.

This makes Riyadh’s efforts to maintain oil price stability at high levels less effective. Additionally, the kingdom’s ability to regulate and discipline the broader OPEC group is further weakened.

David Oxley, head of climate and commodities economics at London-based research firm Capital Economics, described this move as “the beginning of a split,” warning that “the ties holding OPEC members together have weakened.”

Saudi Arabia needs high oil prices of €77 (Rp1.5 million) per barrel to fund ambitious government spending under Vision 2030, a series of major infrastructure projects aimed at reducing the kingdom’s reliance on fossil fuels. This includes a futuristic city valued at $500 billion (Rp8,500 trillion) called NEOM.

Every additional barrel held back by the country means lost revenue, harming its economic growth.

The UAE’s exit also reveals long-standing tensions within OPEC, particularly perceptions that Saudi Arabia dominates decision-making.

This step comes as OPEC’s overall influence has shrunk. The oil organisation once controlled more than half of global supply. Today, OPEC controls less than a third of global supply.

What is the impact of the UAE’s exit on global oil prices?

The United Arab Emirates’ (UAE) exit is unlikely to cause major direct changes to global oil prices, especially as disruptions in the Strait of Hormuz dominate the market.

Most oil exports in the region are still hampered, and the UAE is currently diverting around 1.8 million barrels per day (bpd) to the Fujairah port on the Gulf of Oman coast via a pipeline operating at maximum capacity. Any additional production the country wishes to increase cannot immediately enter the market.

As a result, the announcement had almost no impact on prices in the short term, with Brent crude oil prices remaining relatively unchanged on Tuesday.

“In the short term, I think the UAE’s exit won’t have a big impact because what’s happening in the Strait of Hormuz is dominating the global oil picture. This OPEC news is relatively minor,” Jeff Colgan, an OPEC expert from Brown University, told DW.

Once the Hormuz situation normalises, the UAE could potentially add several hundred thousand barrels per day to the market. In the long term, the UAE’s exit points to slightly lower and more volatile oil prices.

Can the United Arab Emirates (UAE) make other oil-producing countries reconsider their OPEC membership?

Some oil industry analysts say the UAE’s exit adds to long-standing doubts about OPEC’s cohesion.

“We might see the whole organisation collapse,” Colgan told DW, adding that he believes Saudi Arabia will likely try to keep the group together as “the main pillar of the organisation.”

However, the UAE’s exit highlights dissatisfaction with OPEC’s quota system, showing a split particularly with Saudi Arabia.

OPEC itself is already under pressure from repeated quota violations by members like Iraq and Nigeria, as well as Russia’s inconsistent compliance with OPEC+. The UAE’s decision to leave adds to this fragmentation.

In his analysis for Capital Economics, Oxley warns that in the medium term, if other producers with spare oil capacity “see the UAE succeeding in expanding…”