UAE exits OPEC: What is OPEC and how does it operate? Here’s all you need to know

The United Arab Emirates announced on Tuesday (April 28) that it will exit the Organization of the Petroleum Exporting Countries (OPEC) and the broader OPEC+ alliance, with the decision taking effect from May 1. The UAE’s state news agency cited Abu Dhabi’s long-term economic strategy as the key reason behind the move, coming at a time of heightened volatility in global energy markets amid ongoing geopolitical tensions linked to the US-Iran conflict. The decision marks a major shift for a country that has been part of OPEC for more than five decades. Analysts say it could reshape global oil supply dynamics.

What is OPEC? When did the UAE join?

OPEC was founded in September 1960 at the Baghdad Conference by five countries: Iran, Kuwait, Iraq, Saudi Arabia, and Venezuela. Before its formation, Western oil companies, known as the “Seven Sisters”, controlled global oil pricing. OPEC was created to give producing nations greater control over prices and supply. The UAE joined the organisation in 1967, just years before the 1973 oil embargo that dramatically increased global oil prices and strengthened OPEC’s geopolitical influence.

Rise of OPEC+

In 2016, OPEC+ was formed, bringing in major non-OPEC producers led by Russia. The alliance now accounts for around 40% of global crude production and nearly 60% of internationally traded oil, according to the US Energy Information Administration.

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How does OPEC influence global oil markets?

OPEC functions like a coordinating body that manages oil prices by setting production quotas for member countries. This system helps prevent oversupply during weak demand periods, stabilising prices and protecting revenues for oil-dependent economies. At the same time, it allows production increases when supply shortages threaten price spikes.

Impact of regional conflict and the US-Iran war

The UAE’s exit also comes amid growing instability in West Asia. The Strait of Hormuz, a critical route for nearly one-fifth of global oil shipments, has seen disruptions due to escalating tensions. The conflict has also raised security concerns over Gulf energy infrastructure. With Iran also a founding OPEC member, consensus-based decision-making has sometimes limited the UAE's flexibility in managing exports during geopolitical crises.

Strategic shift and economic vision

The UAE has been pushing to expand its oil production capacity while also diversifying its economy. Energy Minister Mohamed al-Mazrouei told Reuters that “A careful look at current and future policies related to the level of production” influenced the decision. State energy giant ADNOC is investing heavily to raise production capacity to five million barrels per day by 2027. However, OPEC quotas have restricted full utilisation of the UAE’s infrastructure, pushing Abu Dhabi toward a more independent energy strategy. The country is also accelerating its transition toward a knowledge-based economy focused on technology, education, and investment sectors.

Impact on global oil prices

The UAE’s exit is expected to weaken OPEC’s collective control over supply management. This could increase competition among oil producers, potentially putting downward pressure on global crude prices while also increasing volatility. For oil-importing countries such as India, this may initially reduce fuel costs. However, longer-term market instability could widen price fluctuations and supply options. Analysts also suggest other producers, including Saudi Arabia, could reassess their participation in the future.