The United Arab Emirates has shut the door on OPEC. What are the consequences of this withdrawal? | Experts’ Opinions

It is said that the only stable thing is… change. Nothing makes this statement more relevant than the events that have been happening in the oil value chain for the last couple of months. The most recent action – the United Arab Emirates’ decision to leave the Organization of the Petroleum Exporting Countries (OPEC) on May 1 marks a major structural change for the global energy market. The announcement comes during the very tense situation in the Strait of Hormuz, where hundreds of oil tankers (including those from the UAE) are being blocked by Iran military, causing exports to be halted, which threatens economic growth and stability in the region. According to experts, the UAE’s decision will further weaken OPEC’s influence on global oil supply and prices, have a direct impact on already fragmented multilateral international collaboration, and place a new burden on the shoulders of oil-dependent countries. However, as every situation should be analysed through several perspectives, we asked experts to share their opinions on the potential risks and benefits of the UAE leaving OPEC. Check their insights below.

OPEC – the Organization of the Petroleum Exporting Countries- was established in 1960 by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, with the aim of unifying member-countries’ petroleum policies and ensuring stable prices. Headquartered in Vienna, its current membership includes 11 oil-producing nations: Algeria, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, the Republic of the Congo, Saudi Arabia, and Venezuela. The former members are Angola, Ecuador, Indonesia, and Qatar, who were joined by the United Arab Emirates that announced its exit as of May 1, 2026. In 2016, “OPEC+” was launched, which combined OPEC members and 10 other major oil-producers — most notably Russia — to better control the global crude oil market. Together, these two groups manage the world’s most significant energy resources, holding approximately 79% of global proven oil reserves.

DevelopmentAid: What are the potential benefits and risks for global energy governance driven by the UAE exiting OPEC, and how might this decision affect fiscal stability and development financing in oil-producing countries?

“The UAE’s exit was the culmination of a multi‑year strategy and represents a foreseeable evolution of its energy policy — moving beyond quota‑based constraints and aligning with a broader long‑term vision to accelerate its transformation toward sovereign energy autonomy, with a renewed focus on national priorities, investor confidence, and future market fundamentals. Over the past 20 years, petro‑diplomacy vis‑à‑vis the transformation of the global energy market has progressed toward geo‑energy diplomacy, moving away from conventional producer-consumer negotiations to a more complex interaction involving market diversification and a rebalancing of influence among both established and emerging energy players. This structural change has led to a decrease in OPEC’s power, evident in its falling share of global crude production from approximately 40% in 2006 to 36% in 2026, an erosion hastened by the UAE’s exit, which represented about 12% of OPEC’s overall output. The UAE nexus serves as an example of how the transition from petro-diplomacy to geo-energy diplomacy splits the world’s energy markets, making oil-dependent nations more vulnerable to price and volume instability. Governments usually cut capital investment first when oil earnings become unpredictable, postponing development, social services, and infrastructure projects. Poorer areas face stalled initiatives, dwindling prospects, and a deterioration in services because of this pattern, which also increases social and spatial inequality. Rushed subsidy reforms can exacerbate financial strain and disproportionately impact low-income households if they are not carefully planned and compensated.”

“The withdrawal of the United Arab Emirates from OPEC or the OPEC+ will have a noticeable but not necessarily decisive impact on global energy market stability.

1. Limited short-term impact. The UAE is an important producer, but not the largest within OPEC. Its exit would not likely trigger an immediate price shock, especially if informal coordination continues.

2. Weakened group cohesion. OPEC+ relies on collective discipline in managing output. The UAE’s exit could:

• • • • • • • • Reduce overall compliance
              • Encourage other members to renegotiate or reconsider participation

This would lead to higher price volatility.

3. Increased competition for market share. The UAE might raise production more freely, potentially resulting in:

• • • Oversupply
    • Downward pressure on prices unless offset by cuts elsewhere

4. Greater volatility, less stability. OPEC+ acts as a market stabilizer. Any fragmentation could reduce its ability to:

• • • Manage supply effectively
    • Cushion shocks such as conflicts and economic downturns

5. Market sentiment effects. Markets react strongly to expectations:

• • • A withdrawal may signal weakening coordination
    • This could increase speculation and price swings

My conclusion: The impact is not likely to be an immediate disruption, but rather higher volatility and reduced capacity to stabilize oil markets, especially if other countries follow suit.”

“The United Arab Emirates’ decision to exit OPEC reflects a shift toward greater national autonomy in energy policy, with both opportunities and risks for global governance. On one hand, it may allow the UAE to optimize production strategies and diversify its economy. On the other hand, it could weaken the collective mechanisms that stabilize oil markets and coordinate responses to global challenges. From an environmental perspective, this fragmentation may complicate efforts to align fossil fuel production with climate goals, potentially increasing greenhouse gas emissions if production expands independently. Additionally, oil-dependent countries could face greater fiscal volatility, affecting their capacity to invest in sustainable development and climate adaptation. Overall, this transition underscores the urgent need to strengthen international cooperation and accelerate the shift toward cleaner energy systems to ensure long-term environmental and economic stability”.

“The exit of the UAE from OPEC will mark a shift towards greater national autonomy in oil production. This move could give the UAE more flexibility to increase production and optimize revenue, enhancing its competitiveness in the global market, particularly in Asia. However, such a departure poses systemic risks. OPEC’s effectiveness relies on cohesion among its members, particularly with the key players like Saudi Arabia. The UAE’s exit could lead to reduced discipline within OPEC and OPEC+, resulting in uncoordinated production increases and greater oil price volatility. This fragmentation could erode the stabilizing influence OPEC has historically had on global oil markets. For oil-dependent nations, the consequences are significant. Increased price volatility threatens fiscal stability and could lead to unpredictable government revenues, exacerbating inequalities, especially in countries like Nigeria and Iraq. Additionally, uncertainty in oil revenue may hinder public investment in critical infrastructure and social services, pushing these nations toward higher borrowing and debt vulnerability. In the long run, a fragmented oil governance structure would pressure those economies reliant on oil to strengthen their fiscal resilience and diversify away from hydrocarbons.”

“The UAE’s exit from OPEC represents a tectonic shift for the global market. The primary benefit for the UAE is the freedom to increase production to monetize the massive infrastructure investments currently constrained by quotas. For global energy governance, this signifies a weakening of OPEC+ influence and a transition toward market-driven pricing, which will increase volatility but accelerate the adaptation to a “green transition.” Risks involve a potential price war. If the UAE begins discounting, it will undermine the fiscal stability of other oil-dependent nations. Countries with high production costs (e.g., Nigeria or Angola) would face sharp budget deficits, forcing them to slash social spending. This would inevitably exacerbate social inequality. While wealthy Gulf states can rely on sovereign wealth funds, poorer exporters risk facing inflation and a decline in real household income. Furthermore, price destabilization would jeopardize development financing: investors will avoid long-term projects in countries with uncertain revenues. Ultimately, the UAE’s “oil independence” could act as a catalyst for an economic crisis among more vulnerable market participants, deepening the divide between developed and developing exporters.”

See also: Assessing the impact of the 2026 Iran war on the economies and cooperation in the Gulf region | Experts’ Opinions

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