Why The UAE Walked Away From OPEC

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0:01This is a shocker.

0:02A bombshell announcement.

0:03Shock waves through energy markets.

0:05Some major news in the Middle East. The United Arab Emirates announced today,

0:09pay attention to this, that it will officially leave OPEC.

0:12It's a big moment in geopolitics. It’s a big moment in the world's economy.

0:16On April 28, 2026, the United Arab Emirates announced that after nearly 60 years,

0:23it was leaving one of the world’s most powerful alliances of oil-producing countries.

0:28This was a seismic split. But for the seasoned OPEC watchers though,

0:33this is something that has been rumored for some time now.

0:36They are saying it's purely an economic decision. They're saying they've got

0:39different priorities now, but some people are saying it's maybe a bit of a schism,

0:44a bit of a split between them and the Saudis.

0:46Within OPEC - the Organization of the Petroleum Exporting Countries – Saudi

0:51Arabia has long been the largest producer and is the de facto leader. That gives it

0:56significant influence over how much oil OPEC puts into the market, and indirectly, over oil prices.

1:02But the UAE’s exit isn’t just about oil and who controls it. The war in Iran and

1:08the blockade of the Strait of Hormuz, the world's most important oil transit sea lane,

1:13have made it clear that this is also about power, politics and shifting alliances in the Gulf.

1:18The UAE’s departure isn't necessarily a reaction to a single grievance. The UAE has

1:24a different future in mind, and it doesn't want to wait for consensus to catch up.

1:29So, why did the UAE really leave OPEC? And what

1:32does that decision reveal about the country’s post-oil strategy?

1:47Let's go back to 1960, a very different world. Post 1945, post the war, oil was dominated by

1:56seven big players, but none of them were countries. They were all oil companies.

2:01Together, the so-called Seven Sisters controlled around 85% of the world’s petroleum reserves.

2:08So, the countries thought, hang on a second, we want to take back control, so that's why,

2:121960, five countries, four out of the Middle East, plus Venezuela, started OPEC to wrest

2:18control away from those Western oil companies and gain control of their immense reserves.

2:23The Emirate of Abu Dhabi joined in 1967 – four years before the formation of

2:27the United Arab Emirates. Over time, the UAE became one of OPEC’s most important members,

2:33with the group’s second-largest spare production capacity after Saudi Arabia.

2:38For decades, OPEC has used production quotas to limit supply and help stabilize oil

2:43markets. But those quotas have also been a recurring source of tension,

2:48especially for countries that want to pump more.

2:50Angola’s exit, for example, followed a dispute over its production quota. Ecuador

2:55also left after arguing that membership no longer served its economic interests.

3:00Consider the UAE’s oil production capacity. As of 2025, the country could extract 4.85

3:06million barrels per day. But under OPEC’s limits, its quota was just under 3.5 million

3:11barrels per day, leaving roughly 1.3 million barrels a day of potential output unused.

3:17The quotas were becoming a bit of an irritant for Abu Dhabi, and when I've spoken to senior

3:22Emirati officials over the years, you could really hear that frustration beneath the

3:27diplomatic language. OPEC's framework made perfect sense for the small oil independent

3:32state that the UAE once was. But this economy is increasingly sophisticated.

3:38And OPEC’s grip on the market has been weakening.

3:41OPEC+ still produces a large share of the world’s crude. But its share has fallen,

3:46from just over half of global production in 2016 to less than half by 2023.

3:51That’s partly because more of the growth is now coming from outside the alliance,

3:55in countries such as the U.S., Canada and Brazil.

3:59OPEC really underestimated non-OPEC, the Canadians with their oil sands,

4:03the Americans with their shale and other producers out there,

4:06including the likes of the Chinese and one or two European players.

4:09The feeling is that some of these producers want to capitalize on

4:13these immense reserves before the world moves on to other products. When you're

4:19sitting on over 100 billion barrels in the ground, you're thinking, "Well, are we ever

4:24going to get this stuff out the ground? Are we ever going to be able to monetize it?"

4:27Capitalizing on its reserves has become more urgent for the UAE and other oil producers.

4:32The strategy now is to use oil to become a post-oil economy. Some of the fastest growing

4:38sectors of the economy here are in areas like tourism and aviation and logistics and advanced

4:45manufacturing, for example, even life sciences. Oil now represents about 25% of UAE’s GDP,

4:51and that's down from over 30% in 2013. That is a structural transformation.

4:57Following the country’s OPEC exit in May 2026, ADNOC – the Abu Dhabi National Oil

5:02Company – announced $55 billion in project awards through 2028,

5:07aimed at expanding oil and gas capacity, industrial capacity and local manufacturing.

5:12The UAE also plans to fast-track a new West-East pipeline,

5:16designed to bypass chokepoints like the Strait of Hormuz.

5:19Just days after the UAE’s announcement, OPEC+ — the wider producer alliance that

5:24includes Russia — announced a modest oil output increase.

5:27I don't think it's about quotas, because I do believe pretty much

5:31every OPEC member will probably raise production above quotas initially for

5:36a few months to make up for the lost production right now.

5:40Which raises the question: if OPEC was already preparing to let members pump more, why leave now?

5:46Iran attacking eight Gulf states, retaliating against U.S. and Israeli strikes Saturday.

5:52The Iran war basically changed everything about how the UAE views its regional relationships.

5:57On February 28, the U.S. and Israel launched wide-scale,

6:01coordinated airstrikes on Iranian targets, triggering a wider regional conflict.

6:06Iran targeted Emirati territory directly. They sent smoke over Dubai's skyline.

6:12Abu Dhabi really absorbed those attacks largely alone.

6:16The attacks included energy infrastructure in Fujairah, one of the UAE’s key oil hubs.

6:22Sitting over the table with Iran in OPEC, perhaps they're finding that more and more difficult.

6:27For the Middle East, across the board, the damage to infrastructure should not

6:32be underestimated. And this is not just about oil, right? Some of the countries have openly

6:36come out and said the damage that has been done to upstream gas infrastructure. And remember,

6:40a lot of this gas is associated gas, and if the gas can't flow, the oil can't flow either.

6:46The war also changed the mood inside OPEC.

6:49In my history, there's always been angst with Iran and some of the other GCC nations as well,

6:55but they've always said at OPEC, we leave the politics at the door,

6:58and it's purely about price and oil. The recent conflict has really tested that.

7:02The UAE and Saudi Arabia are the standard setters for Gulf foreign policy. These are

7:07countries that are brothers and partners, but it's also fair to say, like most families,

7:12they have their differences. What really looked like an unbreakable alliance a decade

7:16ago has developed some fault lines. More recently, these countries are

7:20on the opposite sides of a growing list of pressure points, including Sudan and Yemen.

7:26The GCC countries, the Gulf Cooperation countries, have had a really good

7:30relationship over the years as well, but rivalry over financial services, over trade, over tourism,

7:34over a whole host of issues as well, certainly appears to be coming to the fore as well.

7:39The UAE aligned very closely with the U.S. and Israel at the onset of the war,

7:44while Saudi Arabia has worked more quiet diplomatic channels and Riyadh

7:49has also come to view elements of that UAE alignment in poor light.

7:54The Abraham Accords, brokered by the U.S. in 2020,

7:58normalized relations between Israel and several Arab states,

8:02including the UAE. But after the Iran war, those ties took on greater strategic significance.

8:08The UAE was already a major U.S. security partner,

8:11and the two countries have deepened cooperation in defense innovation, AI and advanced technology.

8:16The UAE is going to use higher hydrocarbon revenues now to fund everything from AI

8:21investments with the most sophisticated American technology partners to deepening its $1.4 trillion

8:28investment relationship with the United States. The map is genuinely being redrawn. The UAE might

8:33actually reconsider other regional memberships beyond OPEC, as Abu Dhabi maps out its post war

8:40future. The UAE’s bet now is that its future belongs in Washington's orbit, in the Abraham

8:46Accords framework, and of course, at the table of global tech and finance, not at the table of OPEC.

8:52Ultimately, it's a good thing for getting the price of gas down, getting oil down,

8:58getting everything down. They have it all. He's a great leader actually. So, no,

9:03I'm okay. They're having some problems in OPEC.

9:07For the U.S., a weaker OPEC may sound like good news, with more supply and lower oil prices.

9:12But while many are focused on what the move means for oil prices today, the bigger question

9:17is what it means for the system that has helped manage oil supply for more than half a century.

9:22We could see other countries leaving. We could even see a fraying of the OPEC+. What I really

9:27am interested in is what the relationship between Russia and Saudi will look like going forward.

9:33But even if countries don't go, what is the adherence to production quotas going to look like?

9:38I think the market tends to want to write the obituary for OPEC

9:43all the time, but it's actually been proven wrong time and time again. The

9:46job of OPEC is to make sure that prices are stable for both consumers and producers.

9:51I don't think UAE leaving is beneficial or, you know, non-beneficial for anyone.

9:57This might not even be good for the U.S., because if it does induce volatility, if it does induce

10:02price declines, then this much lauded U.S. energy independence, that will be under threat.

10:07And if more producers start prioritizing their own capacity, their own revenues

10:11and their own national strategies, the market becomes harder to coordinate.

10:15None of them want a price war, but what they do want is market share. We have to

10:19put the premise in that these wars will end. Then you're going to have an awful

10:23lot of production out there. The Russians are going to want to rebuild the economy.

10:26The Iranians are going to want to rebuild their economy. The Americans, of course,

10:29are going to want to carry on with their energy independence and enjoying this position they've

10:33got because they're exporting more U.S. oil product than they have done in decades.

10:38We very much believe that the world is in a deficit right now. We are losing over a

10:44billion barrels of oil and it’s going to be needed, more production is going to be

10:47needed down the line to refill the depleted stocks, to refill new tanks that come up.

10:52The UAE's exit alone could probably add around 2 million barrels per day

10:56to global supply. That's going to be really meaningful relief for the

11:00energy-importing economies and a real headache for the higher-cost producers.

11:05Looking long-term though, a major producer going fully independent really introduces

11:09a new competitive dynamic into the global oil markets. Of course, the OPEC group will adapt,

11:14but it's going to need to become leaner and more flexible to stay relevant in a world where one

11:19of its most capable members just decided that it no longer needs to be in the room.

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Why The UAE Walked Away From OPEC

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