The United Arab Emirates made headlines with a bold decision to leave both OPEC and OPEC+. The official announcement came through the state news agency WAM, stating that the country will withdraw its membership effective May 1 to focus on national interests while continuing to act responsibly in global oil markets. OPEC, the Organization of the Petroleum Exporting Countries, formed in 1960 by nations like Saudi Arabia, Iran, Iraq, Kuwait, and Venezuela to coordinate oil policies and stabilize prices. OPEC+ expanded this group in 2016 to include Russia and others, controlling about 40% of global oil supply.
The UAE joined OPEC as a founding member and has been a key player ever since. According to the latest OPEC figures, the UAE produces around 2.9 million barrels of oil per day, making it the fourth largest producer in the group. Its production capacity reaches up to 5 million barrels per day, thanks to investments by ADNOC, the national oil company. Under OPEC quotas, the UAE operated at levels below its full potential, which sparked frustrations over the years. For instance, in 2021, it pushed hard for a higher quota to match its expanded capabilities, leading to tense negotiations within the alliance.
OPEC+ sets voluntary production cuts to balance supply and demand, especially during times of weak prices or economic slowdowns. The UAE adhered to these limits, exporting between 2.5 and 3.4 million barrels daily in recent years, contributing significantly to the group’s efforts to prevent oversupply. These cuts helped lift prices from lows in 2020 to over $80 per barrel in 2022. However, the UAE often argued that its quota did not reflect its spare capacity, creating friction with leaders like Saudi Arabia. OPEC+ meetings became battlegrounds, with the UAE occasionally producing above targets during disputes.
This departure raises questions for OPEC and OPEC+ unity. Losing the UAE weakens the cartel’s grip on supply decisions, as it removes a reliable mid sized producer with growing influence. OPEC now counts 11 full members after this exit, while OPEC+ has 10 OPEC nations plus 10 non OPEC allies like Russia. The group might need to adjust quotas or cuts to compensate, potentially leading to more production from others or looser discipline. For the world oil supply, the impact could be substantial. The UAE supplies about 3% of global oil, and without quota constraints, it might ramp up output, adding 1 million or more barrels daily to markets over time.
Markets reacted swiftly to the news. West Texas Intermediate crude spiked to nearly $102 per barrel, while Brent climbed over $111, before pulling back in overnight trading. Traders worried about unraveling coordination and supply surges, though the retrace suggests some bet on OPEC+ adapting. This volatility highlights how fragile oil balances remain amid geopolitical strains.
The UAE plans to manage its oil policies independently, prioritizing long term growth. OPEC vows to maintain stability despite the blow. Global supply chains, from refiners in Asia to drivers in the U.S., will watch closely as May approaches.
