The UAE’s Exit from OPEC: An Analysis

The United Arab Emirates’ decision to leave OPEC as of May 1, 2026, marks one of the most serious shocks to the global oil market architecture since the creation of the OPEC+ format. It was made amid an escalation of the U.S. and Israeli conflict with Iran, the blockade of the Strait of Hormuz, and the largest loss of export volumes from the Persian Gulf in decades, resulting in rising prices and increased risks for importers. In this context, the UAE’s departure from an organization that has served as the main coordinator of oil supply for more than sixty years carries both economic and geopolitical significance.

Illustrative photo via wallpaperaccess.com

OPEC was established in Baghdad in 1960 at the initiative of Saudi Arabia, Iran, Iraq, Kuwait, and Venezuela, which sought to regain control over production policy and crude oil prices from Western oil companies. Under its statute, the organization was tasked with coordinating and harmonizing the oil policies of its member states and ensuring stable prices. The cartel’s second objective was to ensure stable supplies for consumers. Over time, additional countries from the Middle East, Africa, and Latin America joined, and OPEC moved its headquarters to Vienna, where decisions on production limits are still made today. In the 1970s, the organization’s member states accounted for more than half of global oil production and played a key role in the oil crises of 1973 and 1979, when the embargo and deliberate export restrictions led to sharp price increases and recessions in developed countries.

OPEC Members and the United Arab Emirates (as of 2026) / Map: Wikimedia Commons

The following decades showed, however, that aggressively defending high prices at the expense of volumes could lead to a loss of market share to producers outside OPEC. In the 1980s and 1990s, the organization struggled with the consequences of internal disagreement, as some members frequently exceeded their agreed quotas. The next challenge was the U.S. shale revolution, which in the mid-2010s radically increased oil supply from North America. The response was the creation in 2016 of the OPEC+ format, a broader producer agreement that included Russia, Kazakhstan, and several countries outside the organization itself. It was OPEC+ that coordinated record production cuts after the price collapse of 2014–2016 and during the COVID-19 pandemic, when global oil demand fell sharply.

The United Arab Emirates had long been one of OPEC’s key members, with production reaching around 3–3.5 million barrels per day, while completed investments raised capacity to nearly 5 million barrels per day. Problems began to mount when its actual production potential started to significantly exceed the limits imposed under OPEC+. Abu Dhabi repeatedly raised the issue of the so-called “baseline,” the reference production level from which cuts are calculated, arguing that the existing parameters did not take into account the billions invested in expanding its upstream sector. The dispute over this reference point led in 2021 to an open conflict with Saudi Arabia and temporarily blocked an OPEC+ agreement, while the compromise that was eventually reached only partially satisfied the Emirati side.

From the UAE authorities’ perspective, the problem is strategic in nature: amid discussions about global oil demand approaching its peak in the 2030s, the lowest-cost producers want to monetize their reserves as quickly as possible. The production limits in force under OPEC+ meant that the Emirates kept a significant share of its capacity in reserve, while its competitors outside the agreement – including the United States, Brazil, and new oil-producing provinces – were free to increase output and market share. This is compounded by tensions within the Gulf Cooperation Council itself and Abu Dhabi’s ambition to pursue a more sovereign energy policy vis-à-vis Riyadh. In official statements, the UAE energy minister speaks of a sovereign decision taken after a long-term review of the country’s energy strategy and of the need to respond flexibly to market conditions. In the background, however, there is clear frustration with a quota system that, from Abu Dhabi’s perspective, had increasingly failed to reflect its development interests.

The immediate, short-term impact of the UAE’s departure on global oil supply is limited by purely physical constraints. Due to the risk of attacks on tankers and the limited capacity of the Strait of Hormuz, part of the Emirates’ offshore production remains temporarily unused in any case, while a return to full volumes depends on an improvement in the security situation. Financial markets reacted to the announcement rather moderately: fluctuations in Brent and WTI prices were quickly overshadowed by the broader uncertainty surrounding the conflict over Iran and disruptions to exports from the region. The medium- and long-term consequences are more important. Once tensions on shipping routes subside, the Emirates will be able to gradually raise production above the previous OPEC+ limits, bringing as much as 1.5–2 million barrels per day of additional supply to the market. While this would not necessarily lead to a lasting price collapse in a period of strong global demand, it would significantly increase the risk of oversupply in the event of an economic slowdown or a simultaneous increase in production by other exporters.

The UAE’s decision is also a blow to the cohesion and credibility of OPEC itself. Qatar’s departure at the beginning of 2019 – though less significant economically – had already shown that solidarity among Gulf producers within the organization could not be taken for granted. This time, however, the departing member is a large, forward-looking producer deeply embedded in international capital and technology flows. For Riyadh, this means not only the loss of an important partner in quota negotiations, but also the emergence of a potential competitor for market share in key Asian export markets. For OPEC+ as a whole, it creates the need to redefine how the organization will seek to manage the market in a situation where one of the major players no longer participates in joint cuts. Some analysts speak of the beginning of the end of OPEC as it has functioned so far, while others argue that the remaining states will seek to maintain discipline in order to continue acting as a price stabilizer. In both interpretations, however, the importance of individual national strategies is growing, while the role of the common “umbrella” of the Vienna format is diminishing.

At the geopolitical level, the UAE’s move is being read as part of a broader repositioning among the main players: the United States, China, India, and Saudi Arabia. On the one hand, the Emirates gains greater freedom to adjust supply to the expectations of key importers, which have long pressed for greater supply flexibility and lower prices. On the other, it demonstrates its ability to pursue an autonomous policy toward its neighbors in the Gulf, which may translate into new configurations of energy, investment, and security alliances. Leaving OPEC does not, of course, mean breaking off relations with existing partners. It does, however, signal that amid the energy transition and growing competition for market share, each producer will primarily protect its own interests.

For Poland, the UAE’s decision is of limited direct significance, as the Emirates play only a marginal role in the structure of Polish crude oil imports. Since cutting itself off from Russian supplies, domestic demand has been met mainly by Saudi Arabia, Norway, and the United States, while crude from dozens of directions passes through the Naftoport terminal in Gdańsk. The key point is that Polish refineries and transmission infrastructure have already been adapted to process a wide range of crude grades, increasing flexibility in the choice of suppliers. The UAE’s departure from OPEC therefore does not fundamentally change the security of physical supplies, but it may indirectly affect crude costs through global prices and market volatility. In a scenario of greater competition among Gulf producers – with the Emirates fighting for market share outside the quota regime – importers such as Poland could benefit in the medium term from lower bills for crude oil and fuels.

In a scenario in which the remaining OPEC+ members continue to maintain high prices, while geopolitical risk remains elevated, energy costs will, by contrast, remain under upward pressure. In this context, both public policy and business practice are gaining importance. For the state, this means the need to further develop contingency scenarios, build reserves, and diversify supply routes, but also to strengthen the impulse to accelerate the energy transition. The faster oil’s share in the energy mix and in transport declines, the lower the economy’s vulnerability to price shocks generated by decisions made by Gulf producers.

For companies – especially refineries, the transport sector, and energy-intensive industries –professional price-risk management is becoming crucial: the use of hedging, flexible indexation of contracts to benchmarks, and the integration of procurement policies with financial planning. At a time when traditional mechanisms for coordinating supply are weakening and individual producer strategies are playing an increasingly important role, the advantage will go to those importers and consumers that adapt quickly to new supply conditions while consistently reducing their dependence on oil.

Over the next few years, at least three scenarios can be outlined for OPEC and, more broadly, OPEC+. In the first and most conservative scenario, the remaining members manage to maintain a minimum level of discipline, while the UAE’s additional capacity is offset by further cuts in Saudi Arabia, Iraq, or Kuwait. The market would then remain relatively tight and prices high, benefiting the budgets of fiscally oil-dependent exporters, but accelerating diversification among importers and strengthening incentives to invest in energy efficiency.

In the second scenario, discipline within OPEC+ erodes, additional countries begin to test the limits of loyalty, and the organization loses its ability to maintain coordinated cuts. The market then becomes more competitive, but also more volatile: episodes of oversupply and sharp price declines alternate with periods of sudden price increases following geopolitical shocks. In the third and most radical scenario, OPEC+ turns into a loose consultative forum, while real decisions on production levels are made solely at the level of producers’ national strategies.

From the perspective of Poland and the European Union, this means the need to further strengthen scenario-analysis tools, price-hedging policies, and diversification of supply routes. In practice, this involves maintaining the broadest possible range of contractual options – from long-term agreements with flexible pricing formulas to spot purchases – as well as developing infrastructure that enables the physical rerouting of cargoes between ports and refineries.

The UAE’s decision also fits into the broader context of the energy transition and climate policy. If low-cost producers such as the Emirates seek to maximize output in order to extract as much as possible while they still can, this could make it more difficult to achieve the goals of the Paris Agreement and prolong the period of global dependence on oil. On the other hand, more frequent price shocks and growing supply-side uncertainty accelerate decisions by governments and companies to invest in renewable energy sources, storage, transport electrification, and improved efficiency. In the long term, it may therefore turn out that greater oil-market instability paradoxically accelerates the move away from fossil fuels.

The list of potential short-term beneficiaries primarily includes large fuel importers in Asia – India, China, and some ASEAN (Association of Southeast Asian Nations) countries – which have the infrastructure needed to quickly increase supplies from the UAE and can use growing competition among Gulf producers to negotiate better price terms. Independent exporters outside the cartel, such as the United States and Brazil, may also benefit, as weaker OPEC+ coordination means a greater role for market mechanisms. Among the potential losers, by contrast, are OPEC countries with high fiscal needs and limited production-growth potential – some African producers and certain players in the Gulf – for which the combination of greater price volatility and weaker discipline may mean more frequent episodes of budgetary strain.

Sources

1. Reuters, ‘UAE leaves OPEC in blow to global oil producers’ group’, 28.04.2026, https://www.reuters.com/markets/commodities/uae-says-it-quits-opec-opec-statement-2026-04-28/

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