The United Arab Emirates leaves OPEC: is this a turning point for the global oil market?

The announcement of the departure of the United Arab Emirates was made on April 28, for entry into force on Friday May 1. It comes in a context of strong internal tensions within OPEC+ over production quotas, but also of a regional crisis around the Strait of Hormuz, which is disrupting oil flows and accentuating differences between major Gulf producers. Created in 1960, the Organization of the Petroleum Exporting Countries (OPEC) aims to coordinate the production policies of its members in order to influence crude prices.

Often referred to as a cartel, the organization is based on a simple principle: adjusting the global supply of oil to stabilize prices. Less production leads to higher prices, while an increase in supply tends to reduce them. Over the decades, OPEC has expanded and today operates in tandem with OPEC+, an alliance that includes ten additional countries, including Russia. Together they account for around a third of global oil production. In this whole, the United Arab Emirates occupied a strategic place. The country was among the group’s main producers, with production estimated at around 3.6 million barrels per day.

Beyond their current production, the Emirates have above all a major asset: a capacity to rapidly increase their production. The country has invested massively to reach more than 4 million barrels per day, with a stated objective of 5 million by 2027. This increase in power has come up against quotas imposed by OPEC+, which limit the production of each member to regulate prices. By leaving the organization, Abu Dhabi frees itself from these constraints. The objective is clear: to produce more and sell its resources more quickly, in a context of global energy transition where demand for oil could decrease in the long term.

If the UAE authorities claim that this decision is not “not political”it comes in a context of sometimes tense relations with Saudi Arabia, de facto leader of OPEC. Disagreements have emerged in recent years over production levels and certain strategic directions within the OPEC+ alliance. These two former allies disagree on several foreign policy issues, and their falling out publicly erupted in December over Yemen where they support rival factions. And since the start of the war in the Middle East, Abu Dhabi has not hidden its disappointment with its traditional allies, the Arab League, but also the Gulf Cooperation Council, whose headquarters is in Riyadh.

In the short term, this departure should not cause any immediate upheaval in the market, the Strait of Hormuz remains disrupted and exports limited. But in the medium term, the consequences could be more significant. Freed from quotas, the Emirates could increase their production, injecting more barrels into the world market. It is difficult to imagine that this increase would not exert downward pressure on oil prices. Another possible consequence: a loss of regulatory capacity for OPEC, which deprives itself of a producer capable of quickly adjusting its production in the event of a shock.

This departure finally raises the question of the internal cohesion of the cartel. Several member countries have already been singled out for exceeding quotas, notably Iraq and Kazakhstan, according to regular reports from the International Energy Agency. Even if no other departure is officially considered at this stage, the Emirates’ decision could fuel tensions and weaken the unity of the organization. With the exit of a major and flexible player, OPEC enters a new phase, where its ability to stabilize the global oil market could be further tested.