UAE quits OPEC: more oil supply and lower prices over the long term?

The United Arab Emirates’ withdrawal from OPEC represents a significant blow to the oil cartel at a time when its influence was already waning.

The UAE’s ability to produce oil had been growing in recent years; the nation demanded a higher OPEC quota that Saudi Arabia resisted through the 2010s. Indeed, as our first chart shows, increased production from Iraq and Canada over the past decade pushed the UAE to No. 8 among global producers. That still accounts for roughly 5% of global output, however, making it OPEC’s third-largest producer.

The UAE, like Saudi Arabia, possessed the spare capacity that had long enabled OPEC to influence the global oil market via production increases or cutbacks. However, the shale boom allowed the US to surpass Saudi Arabia as the world’s biggest crude producer in 2018. And potential renewed supply from Venezuela — a founding OPEC member under new leadership after American intervention earlier this year — adds further downside risk to OPEC’s cohesion.

The UAE’s crude exports are heavily oriented toward Asian markets, particularly Japan, South Korea, China, and India — underscoring its strategic importance to the region’s energy security. The UAE was producing 3.3 million barrels per day before the Iran war, well below its capacity of 5 million barrels.

The nation’s bid for more freedom is unlikely to relieve global energy markets in the short term, however, as our final charts demonstrate.

The continued disruption of the Strait of Hormuz remains a critical bottleneck – causing production in Gulf OPEC nations to be cut back by almost a third. Even non-Gulf ports haven’t been immune; exports at the UAE’s eastern gateway are well below the 2024-25 trend. Oil loadings at Fujairah — located on the Indian Ocean, allowing vessels to avoid Hormuz — have still been disrupted by multiple drone attacks.