The United Arab Emirates has announced it will leave both Opec (Organization of the Petroleum Exporting Countries) and the wider Opec+ alliance next month, ending a membership stretching back nearly six decades and sending shockwaves through global energy markets already convulsed by war in the Middle East.

A Historic Departure

The UAE joined the Organization of the Petroleum Exporting Countries in 1967, and its exit will reduce the cartel's membership to 11 nations. Opec was originally founded in 1960 by five countries — Iran, Iraq, Kuwait, Saudi Arabia and Venezuela, to coordinate oil production and defend the interests of major exporters.

The wider Opec+ grouping includes an additional 10 non-Opec members, among them Russia. The UAE's energy minister said that operating outside the group would give the country greater flexibility, and officials framed the decision as a step toward meeting growing global energy demand over the long term, citing the country's recent investments to significantly boost production capacity.

Analysts were swift to characterize the move as a watershed moment for the cartel. Saul Kavonic, head of energy research at MST Financial, called it "the beginning of the end" for the alliance. "With the UAE leaving, Opec loses about 15% of its capacity and one of its most compliant members," he said.

Analysts Warn of Weakened Influence Over Prices

Neil Atkinson, the International Energy Agency's former head of the oil industry and markets division, described the departure as "a major blow to the future effectiveness" of Opec. Atkinson said the cartel's ability to influence price direction will be "clearly weakened" once normal oil production resumes following the ongoing conflict in the region.

He predicted the UAE "will attempt to sell as much oil as they can to as many people as possible," adding that this approach "will run up against any attempts that the Opec group is making to keep prices high." Economists noted that the UAE's competitive position makes it particularly well placed to operate outside Opec's production constraints.

Professor David Elmes of Warwick Business School pointed out that the UAE has one of the lowest break-even prices for oil extraction among major producers — nearly half that of Saudi Arabia — meaning it can sell oil profitably even when prices are lower. "So the UAE wants to sell more and is less concerned with keeping prices high.

Now they can do that," he said. David Oxley, chief climate and commodities economist at Capital Economics, said the departure could lead to lower oil prices overall but higher market volatility in the decades ahead.

He warned that while the UAE is a relatively small producer within the group, the implications could become far more significant if other member states follow suit, or if major producers such as Russia and Saudi Arabia decide to increase output in response.

According to the latest figures from Opec, the UAE produced 2.9 million barrels of oil per day in 2024, compared to Saudi Arabia's nine million barrels per day. Experts suggested the UAE could boost its production by around one million barrels per day now that it is no longer bound by the group's output agreements.

A Win for Trump and a Path to Closer US-UAE Ties

The UAE's decision is being viewed as a significant geopolitical development as well as an economic one. The move represents a win for US President Donald Trump, who has consistently attacked Opec for what he characterized as "ripping off the rest of the world."

In January, prior to the outbreak of the US-Israel war with Iran, Trump called on Saudi Arabia and other Opec nations to reduce the cost of oil and reinforced that demand with threats to impose tariffs. The UAE's departure from the cartel opens the door for closer ties between the two countries.

War in the Middle East Reshaping the Energy Landscape

The UAE's announcement came as the World Bank issued a stark warning that the war in the Middle East has caused the biggest loss of oil supply on record. The institution projected that energy prices will rise by approximately a quarter on average this year as a direct result of the conflict.

It also cautioned that it could take up to six months for shipping through the Strait of Hormuz, one of the world's most critical oil transit routes, to return to pre-war levels. "The poorest people, who spend the highest share of their income on food and fuels, will be hit the hardest," said the World Bank's chief economist, Indermit Gill.

Oil prices have surged sharply since hostilities began. On Tuesday, crude reached USD 113 a barrel, up from approximately USD 73 before the war broke out. Last month, the IEA oversaw the release of 400 million barrels of oil reserves in an attempt to cushion the economic impact of the conflict, though prices have remained elevated.

Atkinson noted that the war "has upended everything," and stressed that the UAE's exit will not have an immediate impact on global energy supply because of the ongoing closure of the Strait of Hormuz.

However, over the longer term, the departure could lead to a meaningful increase in output from the Gulf state. Saudi Arabia, Opec's de facto leader, now faces the challenge of holding together the remaining members of the group in an environment of elevated prices, wartime disruption, and the defection of one of its most reliable partners.

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