The End of an Era: UAE’s Exit from OPEC and what it means for Global Energy Order

On April, 28, 2026, Tuesday, the United Arab Emirates made an announcement that sent shock waves across the global energy markets and diplomatic circles that it would leave the Organization of the Petroleum Exporting Countries (OPEC), effective from May 1, thus ending a membership that had stood strong for more than five decades. The move is part of long-standing miscommunications, ongoing tensions between Saudi Arabia and the UAE, and a rapidly growing war in the region; it's important to examine this from all three perspectives.

A troubled membership:

The UAE's decision to leave didn't happen overnight. Abu Dhabi actually joined OPEC in 1967, even before it officially became an independent country. But the relationship started to go downhill in 2016. That's when the OPEC+ group introduced an unfair rule that they used old figures from 2018 to decide how much oil the UAE could pump, figures that consistently underestimated how much the UAE could really produce. In 2019, talks broke down because Saudi Arabia insisted on extending oil production cuts without letting the UAE increase its quota.

The COVID-19 price war in 2020 made the situation even worse, forcing Abu Dhabi to cut back on production despite having spent billions to build up that capacity. The disagreement became public in July 2021, when the UAE openly refused to extend the cut agreements unless their baseline was revised. This move threatened to completely unravel the OPEC+ system. A small agreement was eventually reached, raising the UAE's production limit to 3.5 million barrels per day. However, this was still much less than their actual capacity of 4.85 million. For Abu Dhabi, OPEC had stopped being something that protected them.

It had become something that held them back. As one of OPEC's top producers, the UAE has generally stayed silent despite the toll this takes on its own economy. "There is a need for more energy in the world. There is a need for more resources in the world and the UAE wants to be unconstrained by any groups," the nation’s Energy Minister Suhail Al Mazrouei said. "The time has come to focus our efforts on what our national interest dictates." The UAE's withdrawal doesn't seem to be one of regret, rather it feels so much as a long-awaited decision to pursue its own economic agenda.

A war as the driver of exit:

Iran's attack has also driven the UAE's departure from OPEC. For weeks, the UAE has been the victim of missile and drone attacks from the other OPEC member state which is Iran. The UAE also has been forced to contend with the ongoing disruption of the Strait of Hormuz, a vital waterway for oil that sees 20 % of the world's crude oil and liquid natural gas pass through on a daily basis. Tensions are not only between Iran and the UAE.

The Saudi-UAE relationship is often referred to as one of the strongest regional partnerships, but recently their opinions on how the war should conclude have differed sharply. Saudi Arabia, Pakistan, Egypt, and Turkey have all called for an end to the war. In response to Iran's ongoing attacks on its citizens, the UAE has stated that any end to the conflict must be accompanied by the security guarantees that Saudi Arabia may not be able to secure. This has eroded the trust between them on the role of OPEC as an economic body for its members.

Impact on OPEC and global markets:

The UAE's departure will have significant consequences for OPEC's future ability to manage market demands. The UAE was the cartel's third-largest producer, and as per reports, the UAE only had less production capacity on hand than Saudi Arabia. Rystad Energy has noted that "losing a member like UAE, which produces 4.8 million barrels per day in capacity, takes a real tool out of the group's hands." U.S. oil prices are rising beyond $100 a barrel after the news.

Former United States State Department energy envoy David Goldwyn has warned of "significant risk of higher oil price volatility as a result of this decision." For the time being, the Hormuz crisis has kept a cap on the volume the UAE could ship regardless of its production capacity. But as the Strait of Hormuz reopens, the UAE has signalled its intention to bring additional production to market at a pace it alone determines. That's not great for the market.

Ultimately, the UAE’s withdrawal from OPEC is a sign of the tensions, competing strategic visions and unequal distribution of power that war has sowed in Gulf energy policy, and a source of instability in an already precarious global oil market. OPEC was created for oil-producing states to act together and protect their economic independence. Now one of its most important players has decided that economic independence may be more effectively achieved on its own. And the consequences of that decision will be felt long after the war is over. 

India in the Balance:

India, which is the world's third-biggest oil buyer and gets more than 85% of its oil from other countries, will be affected by the UAE leaving OPEC in two main ways. Right now, the major issue is the crisis in Hormuz. If Hormuz stays closed, oil prices will remain high. This will squeeze the money out of Indian oil companies and make India's trade gap even bigger.

If oil prices keep going up for a long time, it pressurizes the rupee and gives the Reserve Bank much less flexibility with its money policies. Once the Hormuz Strait is open again, a UAE that's not restricted by OPEC rules, especially with their existing trade deal (CEPA from 2022) and strong partnerships between ADNOC and Indian refining companies, could sell a lot more oil to India at better prices. More oil coming from the UAE, flowing through their growing energy ties with India, could mean Indian refiners pay less to import oil. So, to put it simply, the UAE leaving OPEC is a problem for India in the short term, but it could be a good chance for the future. The situation depends on when the Hormuz crisis gets sorted out.

While the short-term outlook looks uncertain, the UAE has a very clear long-term direction. ADNOC, having recently completed a $150 billion investment in its upstream sector, is very close to achieving a production capacity of 5 million barrels a day by 2027; this was impossible with OPEC quota limits. According to HSBC Global Investment Research, it should take the UAE just 18 months to increase production to 4.5 million barrels a day or higher once the Hormuz crisis is resolved and production resumes.

Ember Future notes that the UAE sees itself preparing for a post-conflict period of falling oil demand and trying to maximize the value of its reserves before fossil fuel demand falls off a cliff. So, the UAE is not just larger, but faster and more capable of adapting to changing market conditions in a way that quota-based production can't allow.

Dr. Anwar Gargash, the diplomatic adviser to Sheikh Mohamed, has said the UAE's pursuit of autonomy has always been a priority of UAE policy, and now it's the UAE's energy policy as well. This leaves the world oil market facing a much larger oil producer that now has no external obligations on its production other than what it believes serves its commercial and national interests. Time will tell whether this has a positive or negative impact on the world oil markets depending on how fast the Hormuz issue gets resolved and whether other OPEC countries decide the price of membership is now more than it was ever worth.