In Brief:
- The United Arab Emirates has announced it will leave OPEC and OPEC+ on May 1.
- The UAE's exit represents a win for US President Donald Trump as well as consumers and the broader economy, experts say.
The United Arab Emirates has announced it is quitting OPEC, dealing a blow to the oil producers' group as an unprecedented energy crisis caused by the Iran war exposes discord among Gulf nations.
The exit of the UAE — one of the group's biggest producers — weakens OPEC's control over global oil supplies and widens a rift between the UAE and its neighbour Saudi Arabia, effectively the leader of the Organization of the Petroleum Exporting Countries.
It could also free the UAE to increase output once exports via the Gulf resume as it would no longer be governed by OPEC quotas.
In his first public comments since the announcement, UAE Energy Minister Suhail Mohamed al-Mazrouei told Reuters in a telephone interview that the decision was taken after examining the country's energy strategies.
He said the UAE had not discussed the issue with any other country.
"This is a policy decision, it has been done after a careful look at current and future policies related to level of production," Mazrouei said.
He also said the world would demand more energy, implying the UAE would be positioned to meet that need.
The UAE's announced it would leave OPEC and OPEC+, which brings together OPEC and allied producers, on May 1, trimming back initial gains on oil prices on Tuesday.
Mazrouei said he did not expect much immediate market impact from the news because of constraints in the Strait of Hormuz.
OPEC Gulf producers have been struggling to ship exports through the Strait, a chokepoint between Iran and Oman through which a fifth of the world’s crude oil and liquefied natural gas normally passes, because of Iranian threats and attacks against vessels.
Between 125 and 140 ships usually crossed in and out of the Strait of Hormuz daily before the war, but only seven have done so in the past day, according to Kpler ship-tracking data and satellite analysis from SynMax, and none of them were carrying oil bound for the global market.
What are OPEC and OPEC+?
OPEC was founded in 1960 in Baghdad by Iraq, Iran, Kuwait, Venezuela and Saudi Arabia with the aims of coordinating petroleum policies and securing fair and stable prices. Today, it includes 12 countries, mainly from the Middle East. The UAE joined in 1967.
The group produced over half of global crude in the 1970s, according to Reuters calculations, before the onset of non-OPEC supply sources such as the North Sea.
In later decades, OPEC's share stood at between 30 per cent and 40 per cent but record output growth from rivals such as the United States has steadily eaten into that share.
OPEC in 2016 sought to regain influence by forming an alliance with 10 non-members, including Russia, which it called OPEC+. The UAE is the fourth largest producer in OPEC+.
The UAE is also the fourth producer to leave OPEC in recent years, and by far the biggest. Angola, which joined OPEC in 2007, quit the bloc at the start of 2024, citing disagreements over production levels. Ecuador quit OPEC in 2020 and Qatar in 2019.
As Gulf supplies have become stuck, the International Energy Agency said OPEC+'s share of global oil output fell to 44 per cent in March from about 48 per cent in February. It is likely to fall further in April as production shut-ins become more pronounced — and then further in May as UAE leaves the group.
A win for US President Donald Trump?
The UAE's exit represents a win for US President Donald Trump, who in a 2018 address to the UN General Assembly accused the organisation of "ripping off the rest of the world" by inflating oil prices.
Trump has also linked US military support for the Gulf with oil prices, saying that while the US defends OPEC members, they "exploit this by imposing high oil prices".
Analysts said it was also positive for consumers and the broader economy.
"This opens the door for the UAE to gain global market share when the geopolitical situation normalises," said Monica Malik, chief economist at ADCB.
Jorge Leon, analyst at Rystad, noted the UAE's significance as one of the few members of OPEC, apart from Saudi Arabia, with spare production capacity that allows it to add extra oil to the market.
"Outside the group, the UAE would have both the incentive and the ability to increase production, raising broader questions about the sustainability of Saudi Arabia’s role as the market’s central stabiliser," he said.
Widening rift between UAE and Saudi Arabia
Once firm allies, Abu Dhabi and Riyadh have developed a simmering rivalry, clashing on issues from oil policy and regional geopolitics to the race for foreign talent and capital.
The UAE is a regional business and financial hub and one of Washington's most important allies. It has pursued an assertive foreign policy and carved its own sphere of influence across the Middle East and Africa.
Especially after coming under attack during the Iran war, the UAE has strengthened its relationships with the United States and Israel, with which it opened ties in the 2020 Abraham Accords. It views the relationship with Israel as a lever for regional influence and a unique channel to Washington.
Some Gulf leaders, meanwhile, met in person on Tuesday in Saudi Arabia, a summit that a Gulf official said aimed to craft a response to the thousands of Iranian missile and drone strikes their nations have faced since the US and Israel launched their war on Iran in late February.
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