NEW DELHI/DUBAI: The United Arab Emirates on Tuesday announced that it will exit both the 12-member Organization of the Petroleum Exporting Countries (Opec) and the broader 22-member Opec+ alliance, which includes Russia, marking one of the most significant fractures in the oil producers’ bloc in recent years. The decision comes amid an escalating global energy crisis triggered by the ongoing West Asia conflict, which has exposed growing strategic and geopolitical divisions among Gulf producers.
The move, effective May 1, could have far-reaching implications for global energy markets and for major oil-importing economies such as India. Analysts say the UAE’s exit may eventually lead to higher crude production from Abu Dhabi, potentially easing global prices and helping lower India’s oil import bill.
The UAE, with capacity of around 4.8 million barrels per day, has long been one of the most influential and compliant members of Opec+, and is currently the fourth-largest producer in the alliance.
Its departure weakens a grouping that has historically sought to project unity despite recurring disagreements over production quotas, market share and regional geopolitics.
UAE Energy Minister Suhail Mohamed al-Mazrouei told Reuters the decision followed a strategic review of the country’s long-term energy priorities. “This is a policy decision. It has been done after a careful look at current and future policies related to level of production,” Mazrouei said.
Asked whether the UAE had consulted Saudi Arabia, Opec’s de facto leader, before taking the step, the minister said no discussions had been held with other member states.
The announcement moderated gains in oil markets on Tuesday. Brent crude futures were trading at $111.19 a barrel at 9 pm IST, up 2.73 per cent.
The exit comes at a time when Gulf oil exporters are facing mounting logistical and security challenges linked to the conflict involving Iran. Opec producers have struggled to move exports through the Strait of Hormuz, the critical maritime chokepoint between Iran and Oman through which nearly one-fifth of global crude oil and liquefied natural gas shipments pass, amid Iranian threats and attacks on commercial vessels.
Mazrouei said the UAE’s withdrawal would not immediately have a major impact on markets because supply constraints in the strait remain severe.
Before the war, Opec and Opec+ together controlled nearly half of global oil production. However, according to the International Energy Agency, the alliance’s share of global output fell to 44 per cent in March from around 48 per cent in February, and could decline further as production shutdowns intensify.
Energy analysts say the UAE’s departure signals a broader shift in producer priorities, with countries increasingly focusing on monetising reserves and defending market share rather than adhering to coordinated output restraint. “Producers with spare capacity may prioritise monetising reserves and protecting market share over collective restraint. In that context, the logic for early movers becomes more compelling,” said Jorge Leon, head of geopolitical analysis at Rystad Energy. “The UAE, with capacity of around 4.8 million barrels per day and significant room to increase output, is particularly well positioned to pursue such a strategy outside the group.”
Monica Malik, chief economist at ADCB, said the move could ultimately increase the UAE’s global market share once geopolitical conditions stabilise. “This opens the door for the UAE to gain global market share when the geopolitical situation normalises,” Malik said, adding that the exit could be positive for consumers and the broader global economy.
The decision also comes at a time when global spare production capacity remains historically low, leaving oil markets vulnerable to price spikes and supply disruptions. Operating outside Opec+ would allow the UAE to maximise output from some of the world’s lowest-cost and relatively lower-carbon oil reserves.
For India, the world’s third-largest crude oil importer, the UAE’s exit could offer both opportunities and risks. “The exit of the UAE from Opec is likely to increase global oil supply flexibility in the medium term as UAE would be free from Opec mandates, which could soften crude prices,” said Sourav Mitra, partner-oil and gas at Grant Thornton Bharat.
“It is likely to be beneficial for India’s import bill and inflation in that sense. However, in the short term, such events typically lead to market volatility and geopolitical uncertainty, requiring India to strengthen supply diversification and bilateral energy ties,” he added.
Industry experts also pointed to the UAE’s strategic geographic proximity to India as a major advantage if exports rise. “The UAE was among the compliant members of the oil cartel. The move is expected to lead to an increase in crude oil production from the UAE. This is a positive move for all crude oil consumers, including India,” said Prashant Vasisht, VP & co-head of corporate ratings at ICRA. “The UAE’s proximity to India is also an added benefit to ramp up imports from the country.”
The UAE’s departure also reflects widening political strains within the Gulf region. On Monday, Anwar Gargash, diplomatic adviser to the UAE president, publicly criticised the Arab and Gulf response to recent Iranian attacks during remarks at the Gulf Influencers Forum.
Meanwhile, Gulf leaders met in Saudi Arabia on Tuesday for a high-level summit aimed at coordinating a response to the wave of Iranian missile and drone attacks that have hit the region since the US and Israel launched military operations against Iran in late February.
Mazrouei maintained that global energy demand would continue to rise and suggested the UAE’s move was aimed at positioning the country to respond more aggressively to future market needs. “The world will demand more energy,” he said, defending the decision to leave the producer alliance after decades of membership.
Source: Business Standard
