The UAE’s exit reflects mounting frustration with OPEC+ production quotas that limited output well below its capacity. Having invested heavily to expand production capabilities, the country is now prioritising volume growth over coordinated price support.
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The decision by the United Arab Emirates (UAE) to leave OPEC+ after nearly six decades is set to reshape global oil market dynamics, weakening the cartel’s pricing power and accelerating a shift toward higher competition and lower prices in the years ahead.
According to Bridget Payne, head of energy forecasting at Oxford Economics, the UAE’s departure will allow it to pursue its long-standing ambition of ramping up crude output toward 5 million barrels per day (bpd), though ongoing disruption to the Strait of Hormuz is expected to delay that target until 2028.
“The additional supply will weigh on global oil prices and, therefore, we’ve lowered our 2028 Brent forecast by 3%,” Payne said. She added that the production expansion could significantly boost the UAE economy, contributing “a little over 5 percentage points to GDP growth in 2027, and 2 to 3 percentage points in 2028.”
The UAE’s exit reflects mounting frustration with OPEC+ production quotas that limited output well below its capacity. Having invested heavily to expand production capabilities, the country is now prioritising volume growth over coordinated price support.
Payne noted that this move could encourage other producers with spare capacity to reconsider their membership, warning that “the benefits of membership will decline” as the group’s ability to manage prices weakens, with implications extending beyond the UAE.
Ipek Ozkardeskaya, senior analyst at Swissquote, emphasised the scale of the shift, noting that the UAE accounted for roughly 12% of OPEC’s production.
“OPEC accounted for about 35–40% of global market share; without the UAE, this share would drop to roughly 31–36%,” she said. “It means that OPEC's output restrictions would have a smaller impact on stabilizing global oil prices.”
Ozkardeskaya warned that the UAE’s move could trigger a broader breakdown in collective discipline among producers.
“The UAE's departure could encourage other producers to pursue their national interests independently — meaning maximizing production to maximize revenue,” she said.
“In short, higher competition and more supply will likely weigh on medium- to long-term oil prices once the Middle East dust settles.”
In the near term, however, geopolitical tensions and supply disruptions are overshadowing structural changes. With oil flows through the Strait of Hormuz severely constrained, global markets remain undersupplied, pushing prices above $100 per barrel.
“The split will have little impact” in the short run, Ozkardeskaya said, as physical supply constraints dominate price movements.
Analysis from Wood Mackenzie underscores the longer-term significance of the UAE’s departure.
The firm described the move as “the most significant fracture in the organization’s 66-year history,” highlighting its potential to undermine OPEC’s influence.
“As the nation with the second-largest liquids capacity in OPEC, the UAE's exit is momentous,” said chairman Simon Flowers. He noted that the decision reflects both economic priorities and deepening political tensions within the group.
Wood Mackenzie analysts pointed to the widening gap between the UAE’s production capacity and its OPEC quota as a central driver.
Despite capacity approaching 5 million bpd, quotas had capped output closer to 3.4 million bpd, leaving substantial volumes untapped.
“OPEC+ quotas constrained output well below capacity,” said Alan Gelder, senior vice president at Wood Mackenzie. “The UAE has much lower fiscal oil price breakevens relative to its peers, leaving its economy relatively resilient and better able to sustain a potential period of low prices.”
The global research and consultancy group expects limited immediate impact due to infrastructure and logistical constraints, including the partial shutdown of offshore production.
However, it warned that from 2027 onwards, the UAE’s ability to expand supply could intensify competition for market share and increase the risk of oversupply.
BUSINESS REPORT