UAE To Leave OPEC As Strait of Hormuz Stays Shut

The UAE will exit the Organisation of the Petroleum Exporting Countries (OPEC) and the broader OPEC+ alliance effective May 1, 2026, in a move described by state news agency WAM as aligned with its long-term economic and energy strategy.

The decision ends nearly six decades of UAE participation in coordinated oil production policy. The country joined OPEC in 1967 through Abu Dhabi and remained a member after the federation was formed in 1971, contributing alongside producers such as Saudi Arabia and Kuwait to Middle East oil output, which accounts for roughly 30 percent of global supply.

According to WAM, the move follows a review of production policy and capacity, with the UAE aiming to enhance flexibility in responding to market demand while continuing to support stability in global energy markets.

OPEC and OPEC+ have historically coordinated supply through production quotas. The UAE’s exit removes it from these agreements, allowing it to determine output independently.

The country plans to expand production capacity from about 3.4 million barrels per day to 5 million barrels per day by 2027, supported by upstream investment.

UAE Energy Minister Suhail Mohamed Al Mazrouei told Reuters the decision followed a review of national energy strategy.

“This is a policy decision, it has been done after a careful look at current and future policies related to level of production,” he said, adding that the UAE did not raise the issue with other countries.

In an interview with CNBC, Al Mazrouei said the decision was taken after “a very careful and long review” of policy. “The decision to be outside any constraint is something that is important for us to ensure that we are attaining at the market condition, at the right time and at the right pace,” he said.

He said timing was chosen to minimise disruption. “We believe that the world is currently under supplied, and our exit at this time is the right time for it, because it will have a minimum impact on the price.”

Speaking to CNN, he linked the timing to shipping constraints. “Timing is right because it will not significantly impact the market and the price because the Strait of Hormuz is closed and restricted,” he said, adding the move was a “sovereign national decision.”

Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and Adnoc CEO, said the move reflects a sovereign decision aligned with long-term strategy and market stability.

Analysts said the timing reflects policy shifts and geopolitical conditions. Ole Hansen of Saxo Bank said the UAE had “seized the opportunity to exit OPEC, removing the production quota straitjacket that for years frustrated the oil-rich nation.”

“In the short- to medium term, the market should be able to absorb additional UAE barrels,” he said, adding the move raises questions about OPEC’s ability to manage markets if producers prioritise market share.

Recent data shows OPEC production fell 27 per cent to 20.79 million barrels per day in March after disruptions removed 7.88 million barrels per day from supply.

“In many ways, the main surprise regarding today’s announcement that the UAE will quit both OPEC, and OPEC+, from the start of May, is in its timing, as opposed to its substance,” said Michael Brown, Senior Research Strategist at Pepperstone.

“As the US-Iran conflict continues, and the Strait of Hormuz remains impassable, the most significant issue for the crude market is not production, but actually shipping product to where it is needed,” Brown said. “At present, it’s essentially shut, tightening supply conditions day-by-day.”

The UAE said it will continue engaging with producers and consumers while operating outside OPEC and OPEC+.

The energy research company Rystad Energy said the UAE’s withdrawal marks a significant shift for the oil-producing group.

“Losing a member with 4.8 million barrels per day of capacity, and the ambition to produce more, takes a real tool out of the group’s hands,” Rystad Energy’s head of geopolitical analysis, Jorge Leon, said in a statement.

“With demand nearing a peak, the calculation for producers with low-cost barrels is changing fast, and waiting your turn inside a quota system starts to look like leaving money on the table,” he continued.

“Saudi Arabia is now left doing more of the heavy lifting on price stability, and the market loses one of the few shock absorbers it had left.”

The Organization of the Petroleum Exporting Countries (OPEC) was founded in Baghdad, Iraq, with the signing of an agreement in September 1960 by five countries namely Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. They were to become the Founder Members of the Organization.

These countries were later joined by Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), Gabon (1975), Angola (2007), Equatorial Guinea (2017) and Congo (2018).

Ecuador suspended its membership in December 1992, rejoined OPEC in October 2007, but decided to withdraw its membership of OPEC effective 1 January 2020.

Indonesia suspended its membership in January 2009, reactivated it again in January 2016, but decided to suspend its membership once more at the 171st Meeting of the OPEC Conference on 30 November 2016. Gabon terminated its membership in January 1995.

However, it rejoined the Organization in July 2016. Qatar terminated its membership on 1 January 2019. Angola withdrew its membership effective 1 January 2024.

The OPEC Statute distinguishes between the Founder Members and Full Members – those countries whose applications for membership have been accepted by the Conference.

The Statute stipulates that “any country with a substantial net export of crude petroleum, which has fundamentally similar interests to those of Member Countries, may become a Full Member of the Organization, if accepted by a majority of three-fourths of Full Members, including the concurring votes of all Founder Members.”

The Statute further provides for Associate Members which are those countries that do not qualify for full membership, but are nevertheless admitted under such special conditions as may be prescribed by the Conference.