The United Arab Emirates has decided to exit OPEC and the wider OPEC+ alliance from May 1, in a move that could reshape global oil markets at a time when .
The decision comes as oil prices remain elevated. Brent crude was trading at $110.74 per barrel, while WTI crude stood at $99.13 as of 8 am, reflecting continued concerns around supply disruptions, especially linked to tensions around the .
The Organisation of the Petroleum Exporting Countries (OPEC) is a group of major oil-producing nations formed in 1960 by , Iraq, Kuwait, Saudi Arabia and Venezuela.
Its main purpose is to coordinate and ensure steady supply.
Over the years, the group has expanded and currently includes countries such as Saudi Arabia, Iraq, Iran, Kuwait, the UAE, Nigeria, Angola, Algeria and others. OPEC+, a wider alliance, also includes non-members like Russia to jointly manage output and influence global oil markets.
. It is one of OPEC’s largest producers and accounts for around 12% of the bloc’s total output, making it a key pillar of the alliance.
Its departure delivers a setback to OPEC and its de facto leader Saudi Arabia, especially at a time when global oil markets are volatile and coordination among producers is critical.
For years, OPEC has relied on production quotas to manage supply and support prices. Member countries agree to limit output in order to keep oil prices stable. The UAE’s exit weakens that structure, as one of the most important producers will no longer be bound by these rules.
The UAE has said the decision is based on its long-term energy strategy and market fundamentals.
Energy Minister Suhail Al Mazrouei said the move will give the country more flexibility over production decisions. He also clarified that the decision was taken independently and was not discussed with other members, including Saudi Arabia.
“This is a policy decision after a careful look at current and future policies related to level of production,” he said.
The move reflects a long-standing tension within OPEC. The UAE has been expanding its production capacity and investing heavily in its oil sector, but OPEC’s production cuts have limited how much it can actually produce and export.
With capacity of around 4.85 million barrels per day and plans to increase it to 5 million barrels per day by 2027, the UAE has increasingly found these restrictions difficult to justify.
The timing of the decision is crucial.
Global oil markets are already facing disruptions due to the ongoing conflict involving Iran. One of the biggest concerns has been the Strait of Hormuz, a key shipping route through which nearly a fifth of the world’s oil and LNG supply passes.
Since late February, disruptions in this region have restricted supply flows and pushed prices higher. This has created a tight market environment where any change in production or policy by major producers becomes even more significant.
In the near term, the impact of the UAE’s exit is expected to be limited.
This is because supply constraints remain in place due to the ongoing disruption in shipping routes. Even if the UAE wants to increase output, it may not be able to export significantly higher volumes immediately.
However, the situation could change once supply routes stabilise.
Without OPEC quotas, the UAE would be free to increase production in line with its capacity and market demand. This could gradually add more oil to global supply.
According to estimates, Abu Dhabi National Oil Company could raise production to over 4.5 million barrels per day, compared to the OPEC+ quota of around 3.4 million barrels per day for the May 2026 period.
Any increase, however, is likely to be gradual, spread over 12 to 18 months, in line with demand conditions and market stability.
The bigger concern is not immediate supply, but what this means for OPEC’s future.
The UAE’s exit could weaken the group’s ability to enforce production discipline among remaining members. If other countries begin to prioritise their own output over agreed limits, the effectiveness of OPEC as a price-managing body could be reduced.
This raises the risk of weaker coordination and more volatility in oil markets.
There is also a possibility that other members may follow similar paths if they feel constrained by production limits, especially those with growing capacity and low production costs.
In the short term, oil prices are likely to remain driven by geopolitical factors rather than this decision alone.
With Brent still above $110 per barrel, the market is reacting more to supply disruptions than structural changes within OPEC.
Over the longer term, however, if the UAE increases output and OPEC’s control weakens, it could lead to more supply entering the market. This may put downward pressure on prices, depending on demand conditions.
At the same time, weaker coordination could also mean sharper price swings, as the market loses a key mechanism that has historically helped stabilise supply.
For India, which imports a large share of its oil,
In the near term, high oil prices remain a concern due to ongoing geopolitical tensions. This could keep pressure on inflation and the country’s import bill.
In the longer term, however, if the UAE increases production and global supply improves, it could help ease prices and reduce cost pressures.
The UAE’s decision reflects a broader shift in global energy markets.
Large producers are increasingly looking to maximise output and revenues rather than remain bound by group decisions. With significant investments planned — including a $150 billion programme through 2030 — the UAE appears focused on expanding its role in global supply.
While the immediate impact may be limited, the move signals a potential turning point for OPEC and global oil markets.
The coming months will show whether this remains an isolated decision or marks the beginning of a wider shift in how oil-producing nations operate.