The UAE’s Departure From OPEC Isn’t Just About Oil – Alex Demas

While the UAE is not the first state to exit OPEC, it is the highest profile departure yet and marks the end of a relationship that began before the modern UAE’s founding. The country in its current form did not join the cartel until the 1970s, but its most oil-rich emirate, Abu Dhabi, has been a member of OPEC since 1967—four years before it joined the six other emirates that compose today’s UAE. Since then, the UAE has become the cartel’s third-largest producer and, arguably, its second-most influential member, behind Saudi Arabia.

The timing of the country’s exit from OPEC—in the midst of a kinetic regional conflict and ongoing oil crisis—may have come as a surprise to global observers, but it is rooted in tensions that stretch back at least a decade. The UAE’s national interests have increasingly diverged from those of OPEC’s other member states, especially since 2016, when Russia and a number of other non-OPEC members began participating with the cartel as part of an expanded 22-member OPEC+. “It’s pretty clear that the UAE has been diverging from OPEC’s leadership for a while now,” Ellen Wald, president of Transversal Consulting and an expert on energy and geopolitics, told The Dispatch.

The UAE’s diverging interests have been particularly acute compared with those of Saudi Arabia, OPEC’s dominant power and de facto leader. “This has been coming to a head for some time,” Kristian Ulrichsen, fellow for the Middle East at Rice University’s Baker Institute for Public Policy, told The Dispatch. “The UAE and Saudi Arabia have had quite different priorities, both within OPEC in terms of oil output, price levels, and ways to either expand capacity or try to maximize revenues, and then they’ve also been sharply competitive in regional politics as well.”

Under Saudi Arabia’s influence, OPEC has become increasingly “price-hawkish,” meaning it has prioritized preemptive production cuts to maintain higher oil prices. The UAE, however, has generally benefited from greater volume, not higher prices, and has built out its production capacity significantly over the past decade in support of increasing its oil output. As a result, the UAE has shouldered much higher costs than other OPEC members in pursuit of Saudi priorities. “What Saudi Arabia has been doing since 2016 in various ways, but really since 2023, has been to try to corral all of OPEC behind this policy of cutting production in order to keep prices higher,” Gregory Brew, a historian of oil and analyst with Eurasia Group’s Energy, Climate & Resources team, told The Dispatch. “The UAE has for years grumbled against this policy because it means that they spend all this money building out capacity, and they haven’t been able to use it.”

Abu Dhabi’s state oil company, ADNOC, announced in 2025 that it would spend around $150 billion to expand the country’s oil infrastructure over the next five years, adding to a similar capacity expansion it began pursuing in 2023. OPEC, however, which sets production quotas for its member states, has consistently resisted increasing the UAE’s quota despite its growing production capacity. In 2025, for example, OPEC set the UAE’s production quota at just 3.41 million barrels per day, almost 1.5 million barrels per day under the country’s production capacity at the time. And with the UAE’s oil production capacity set to rise even further—to approximately 5 million barrels a day by 2027—the costs to the country of remaining in OPEC are only growing. In a 2023 paper, Rice’s Baker Institute estimated that the UAE’s spare capacity then represented $3 billion per month of forgone income, and that, by 2027, that forgone revenue could double to $6 billion per month. “Abu Dhabi wants to move that oil to market as soon as feasible,” Jim Krane, a research fellow at the Baker Institute and one of the paper’s authors, told The Dispatch. “The revenue gains from quitting OPEC are huge.”

As long as the Strait of Hormuz remains closed to international shipping, the effects of the UAE’s departure from OPEC won’t be fully realized, both within the country and in global oil markets. “This is entirely a question of the post-Iran war oil order,” said Rory Johnston, an oil market researcher and Dispatch Energy contributor. The UAE is capable of bypassing the strait via its Habshan–Fujairah oil pipeline, which transports crude from Abu Dhabi’s oil fields to the port of Fujairah and Gulf of Oman, but that pipeline is already operating at or near full capacity. However, when the Strait of Hormuz eventually reopens, the UAE’s exit from OPEC will position it to help fill the global production deficit—roughly 1 billion barrels thus far—caused by the war in Iran. “When this conflict ends, it’s going to take at least 12 months to restore local inventories,” Wald said. “The UAE is positioning itself to be able to supply that needed oil without having to go through OPEC and having to negotiate production quota increases.”

The UAE’s departure from OPEC, while mostly about oil, isn’t only about oil. Broader geopolitical tensions between the UAE and Saudi Arabia have been growing, and divergent security interests have put the Emiratis and Saudis on different sides of several regional conflicts. “There’s been a real change over the past few years,” F. Gregory Gause, professor emeritus at Texas A&M University and an expert on Middle East affairs, told The Dispatch when asked about relations between the UAE and Saudi Arabia.

In the Yemeni civil war, for example, the Emiratis and Saudis initially intervened jointly, but the UAE has since found itself backing a separatist group that was struck directly by Saudi forces late last year. The two countries also support opposing sides in the Sudanese civil war and have competing interests in the Horn of Africa. In 2019, the UAE joined the Abraham Accords, becoming one of the first Gulf states to normalize relations with Israel (alongside Bahrain). At the time, it looked likely that Saudi Arabia would follow suit via a U.S.-brokered defense treaty, but negotiations fell apart following the Hamas terrorist attacks of October 7, 2023, when Saudi public opinion toward normalization collapsed. The two countries’ differing alignments with Israel have been accentuated by the ongoing U.S.-Israeli joint military operation in Iran. “The real geopolitical differences between the Emirates and Saudi Arabia are not how they’re playing the global powers,” Gause said. “It’s how they’re playing the region, with Emiratis doubling down on Israel and the Saudis moving further away from formal relations with Israel.”

Economic and business decisions are also driving divergence between the Saudis and Emiratis. As the UAE seeks to further diversify its economy away from oil and toward technologies like clean energy and AI, it has sought closer relations with developed global economic powers like the U.S. and China. “The UAE is a much wealthier and more diverse economy than the rest of OPEC, which is made up of poorer petro-states where oil is the dominant economic force,” Krane said. Breaking from the Saudi-influenced OPEC, therefore, could allow the UAE to more effectively pursue its lofty economic and geopolitical goals.“The UAE has bigger geopolitical ambitions and is seeking influence in Washington and other global capitals,” Krane said. “It doesn’t want to have its wings clipped by a commodity cartel anymore.” The UAE also sees Saudi Arabia’s Vision 2030—a strategic framework launched in 2016 to diversify and modernize the Saudi economy—as a direct challenge to Dubai’s status as the hub for international business in the region.

What the UAE’s departure means for OPEC’s long-term future is unclear. It is unlikely that the UAE’s defection will mark the beginning of the end for OPEC, but it does point to a decline in the cartel’s influence. “The group’s ability to exercise market power over the global oil market is probably being undermined,” Brew said. The cartel has lost members before, with Angola leaving in 2024 and Qatar in 2019, but it has never wrestled with the defection of a member as important as the UAE.

At the very least, OPEC will have less leverage over global oil prices moving forward, and less capacity to ramp up production when necessary. “This is a major blow to OPEC,” Wald said. “They’re losing essentially 5 million barrels a day of production capacity that was under their authority.” Prior to its departure announcement, the UAE represented 12 percent to 14 percent of OPEC’s total crude production and an even larger share of OPEC’s unused capacity. As a result, Saudi Arabia now has more power than ever over the cartel, but will in turn be even more responsible for maintaining price stability and filling the production gap that the UAE is vacating. The Saudis could also have to deal with leaders of OPEC member states who now feel emboldened to push harder for their own priorities. “We could see that individual states become much more assertive in responding to put their interests first,” Ulrichsen said.

Global oil markets are unlikely to be affected in the short term as the majority of Emirati oil remains trapped behind the Strait of Hormuz, but the introduction of additional production upon resolution of the Hormuz crisis could push oil prices down. OPEC itself could attempt to undermine the UAE by temporarily increasing oil production and driving prices even lower—a method the cartel has used in the past to coerce cooperation. However, because the UAE can sell oil profitably at lower prices than most of OPEC’s own members, such a strategy could be difficult for the cartel to sustain without damaging the coalition.

Regardless of OPEC’s reaction, oil markets appear primed for an uncertain and bumpy road ahead. “Right now, obviously the market is all focused on what’s going to happen with Hormuz,” Brew said. “But as we exit this crisis, I think we’re going to be entering a global oil market that is more volatile, more uncertain, that has fewer guardrails, and now has actors that are going to pursue their own interests rather than attempting to follow any kind of production plan.”