The UAE’s announcement on April 28 that it would quit the Organisation of the Petroleum Exporting Countries (OPEC) – a cartel that has influenced energy prices through coordinated production limits since 1960 – seems to have delivered a major blow to the producers’ group responsible for more than one-third of global crude output.
Under the de facto leadership of Saudi Arabia, the 12-member cartel sets production quotas for its members and regulates crude output levels to tide over oil gluts and shortages worldwide.
As OPEC’s fourth-largest producer, after Saudi Arabia, Iraq, and Iran, the UAE has long chafed at production quotas that constrained its rapidly expanding capacity for years.
Its consistent push for higher production targets led to a public dispute with Saudi Arabia in 2021. Similarly, its demand for a new production target in 2023 resulted in a complicated bookkeeping exercise, which ended up reducing African member state quotas.
The UAE’s departure from OPEC after nearly six decades of membership frees the country from collective output ceilings at a time of heightened geopolitical tensions.
The Iran war and the resulting blockade of the Strait of Hormuz – the narrow waterway used by Gulf nations and Tehran to ship out the bulk of their energy exports – have already sent crude prices to a four-year high.
Experts say the UAE’s exit from OPEC is symbolically weighty but operationally manageable, at least in the near term.
Over the next 12-18 months, the cartel’s production quotas will face only modest pressure, while the UAE gains significant new flexibility to pursue its national interests, they say.
Related
Baris Alpaslan, professor of economics at the Social Sciences University of Ankara, tells TRT World that the UAE’s exit removes a meaningful but not decisive chunk of crude supplies from global markets.
“The real impact is on cohesion and credibility (of OPEC) rather than volume,” he says.
OPEC will persist, but potentially as a looser coalition with more reliance on Saudi leadership and bilateral alignments, instead of strict collective discipline, he says.
Ozcan Akinci, a geopolitical and energy analyst, tells TRT World that the UAE’s move will have a “measurable but manageable” impact on the cartel’s production structure.
Its exit will remove up to 3.4 million barrels a day from the cartel’s coordinated output, he says.
The loss of production does not undermine OPEC’s operational core, as the group’s “centre of gravity” remains firmly with Saudi Arabia, Iraq, and Kuwait, he adds.
This core is sufficient for Saudi Arabia to sustain quota discipline and market management, especially amid ongoing geopolitical constraints, he says.
However, the experts say that Saudi Arabia may adapt strategically to the new realities going forward.
Alpaslan anticipates that Riyadh will tighten internal discipline among the remaining OPEC members, which include Venezuela as well as many African countries, in addition to Gulf nations.
It will do so while leaning more heavily on OPEC+, a broader and looser alliance of oil producers that also includes Russia.
“Saudi Arabia may continue to act as the swing producer, using voluntary cuts to stabilise prices and signal leadership,” he says.
However, the UAE’s exit can potentially embolden other OPEC members with spare capacity to demand greater autonomy – something that may gradually erode compliance with strict production quotas in the coming years, he says.
Akinci says Saudi Arabia is likely to respond to the UAE’s move in two parallel ways: maintaining overall discipline within OPEC to preserve price stability, while allowing for selective flexibility to prevent further internal friction.
In his assessment, OPEC is unlikely to weaken in the short term. It may instead evolve into a more tightly managed structure with a stronger Saudi-led core, he says.
This divergence – a looser coalition versus a tighter core – highlights the uncertainty ahead: OPEC’s future may hinge less on formal quotas and more on Riyadh’s ability to balance leadership with pragmatism.
