The United Arab Emirates has decided to leave OPEC effective May 1, positioning the move as part of a broader strategic realignment following the war with Iran. The conflict severely disrupted regional energy flows and significantly depleted global oil inventories, both commercial and strategic. As a result, the market now faces a prolonged process of rebuilding stocks after the end of hostilities.
Some producers in the Gulf region may struggle for some time to return to pre-war production levels. This reflects damage to infrastructure, logistical constraints and the time needed to restore normal export operations. At the same time, strong demand linked to rebuilding depleted commercial inventories and replenishing strategic reserves may continue to support oil demand long after the conflict has ended.
Against this backdrop, the UAE used the moment to leave OPEC and free itself from production restrictions that had for years limited the country’s ability to fully use its growing output capacity. Before falling to 2.2 million barrels per day last month, UAE production had gradually increased to around 3.6 million barrels per day. Current production capacity is estimated at 4.85 million barrels per day, while the official target is to reach 5.0 million barrels per day by 2027, supported by further upstream investment led by ADNOC.
In the short and medium term, the market should be able to absorb additional supply from the UAE, given low global inventory levels and the need to rebuild them. In the longer term, however, the decision raises a broader strategic question: if other producers also begin to prioritise market share over discipline under production limits, OPEC’s ability to stabilise the market through coordinated supply action could be significantly weakened.
Crude oil production in the United Arab Emirates. Source: Bloomberg
