Expert Corner: UAE’s exit from OPEC is a turning point for the Gulf and energy markets
TAG Experts Aysha Chowdhry, Ahmed Helal, and Nisha Biswal share their views on the UAE stepping away from OPEC.
The United Arab Emirates (UAE) has decided to quit the Organization of the Petroleum Exporting Countries (OPEC), even as the war with Iran has caused the most severe energy crisis in history. The moment marks the coming together of several geopolitical trends, including the rift within the Gulf between Saudi Arabia and UAE, convulsions in the oil market, and the prioritization of national goals over collective groupings.
In this edition of Expert Corner, TAG experts offer their preliminary assessment of the drivers and implications of UAE’s decision for businesses.
Nisha Biswal: UAE’s decision is about sovereignty; no immediate relief for consumers.
The UAE stepping away from OPEC is more about sovereignty than about oil: Abu Dhabi is signaling it won’t subordinate its economic strategy to a cartel that increasingly serves narrower interests. Over time, that erosion of discipline weakens OPEC’s ability to manufacture scarcity and gives importers more room to breathe.
But there is more to the picture: with Hormuz constrained, the ‘market’ is responding to geopolitical leverage more than production math. That’s why this move won’t result in immediate relief for consumers — the risk premium is being set by the ability to disrupt flows, not by who has more quota headroom.
Longer term, a less-disciplined OPEC should structurally favor consumers. But it also means Gulf economies will be living with sharper, more frequent price swings that complicate budgets, subsidies, and domestic stability. In the near term, though, the fundamentals are still dictated by Hormuz: until flows normalize through that chokepoint, no realignment inside OPEC will matter as much as the politics and security of the Strait.
Ahmed Helal: A new blow to Saudi-UAE relations with lasting consequences for GCC cohesion.
The UAE’s decision to exit OPEC comes as talks to reopen the Strait of Hormuz remain in an awkward limbo. The decision reflects the UAE’s growing impatience with OPEC’s preference for an incremental easing of production restraint.
Having embarked on a USD 120 billion capital expenditure program to increase production capacity to 4 million barrels per day (bpd) — compared to an OPEC-mandated quota of 3.41 million bpd — the UAE has consistently maintained that its export potential is severely undermined by the cartel’s conservative approach to production policy. Led by Saudi Arabia, the cartel has prioritized the shoring up of crude prices in the face of a glut in global supply. Prior to the war, surging US production and softening global energy demand had combined to keep crude prices below the USD 80/barrel price level that Saudi needs to balance its budget. Saudi’s preference for production restraint clashed with the UAE’s strategic interest in rapidly monetizing its underground wealth to fund a post-oil economy that is oriented towards services and high-tech.
The dramatic timing of the OPEC exit, amidst the fragile ceasefire, deals a new blow to Saudi-UAE relations that had sunk to historic lows in late 2025. The consequences for GCC cohesion during the current crisis and its aftermath will have a lasting effect on regional security coordination and cross-border business between the Gulf’s two biggest economies.
Aysha Chowdhry: A divided GCC, a weaker OPEC, and a more volatile oil market.
The UAE’s exit from OPEC underscores a deeper structural shift: producer unity is giving way to national strategy. Frustration with quotas and a push to expand capacity are colliding with geopolitical pressures (that include the war in Iran and disruptions in the Strait of Hormuz) in a way that makes coordination increasingly untenable.
The political backdrop here matters too. UAE adviser Anwar Gargash’s criticism of “historically weak” Gulf support highlights widening intra-Gulf fractures at a critical moment. Those tensions are also playing out beyond the Gulf, illustrated by Abu Dhabi’s abrupt demand that Pakistan repay USD 3.5 billion. This signals a harder line toward partners seen as insufficiently aligned during the Iran conflict.
This is not just a tactical shift but a clear signal that internal tensions are now overt, with key producers increasingly unwilling to constrain output for collective price management. Taken together, it points to a weaker, more fragmented OPEC and a more volatile oil market, with less centralized control over supply and pricing.
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Expert Corner: UAE’s exit from OPEC is a turning point for the Gulf and energy markets
The United Arab Emirates (UAE) has decided to quit the Organization of the Petroleum Exporting Countries (OPEC), even as the war with Iran has caused the most severe energy crisis in history. The moment marks the coming together of several geopolitical trends, including the rift within the Gulf between Saudi Arabia and UAE, convulsions in the oil market, and the prioritization of national goals over collective groupings.
In this edition of Expert Corner, TAG experts offer their preliminary assessment of the drivers and implications of UAE’s decision for businesses.
Nisha Biswal: UAE’s decision is about sovereignty; no immediate relief for consumers.
The UAE stepping away from OPEC is more about sovereignty than about oil: Abu Dhabi is signaling it won’t subordinate its economic strategy to a cartel that increasingly serves narrower interests. Over time, that erosion of discipline weakens OPEC’s ability to manufacture scarcity and gives importers more room to breathe.
But there is more to the picture: with Hormuz constrained, the ‘market’ is responding to geopolitical leverage more than production math. That’s why this move won’t result in immediate relief for consumers — the risk premium is being set by the ability to disrupt flows, not by who has more quota headroom.
Longer term, a less-disciplined OPEC should structurally favor consumers. But it also means Gulf economies will be living with sharper, more frequent price swings that complicate budgets, subsidies, and domestic stability. In the near term, though, the fundamentals are still dictated by Hormuz: until flows normalize through that chokepoint, no realignment inside OPEC will matter as much as the politics and security of the Strait.
Ahmed Helal: A new blow to Saudi-UAE relations with lasting consequences for GCC cohesion.
The UAE’s decision to exit OPEC comes as talks to reopen the Strait of Hormuz remain in an awkward limbo. The decision reflects the UAE’s growing impatience with OPEC’s preference for an incremental easing of production restraint.
Having embarked on a USD 120 billion capital expenditure program to increase production capacity to 4 million barrels per day (bpd) — compared to an OPEC-mandated quota of 3.41 million bpd — the UAE has consistently maintained that its export potential is severely undermined by the cartel’s conservative approach to production policy. Led by Saudi Arabia, the cartel has prioritized the shoring up of crude prices in the face of a glut in global supply. Prior to the war, surging US production and softening global energy demand had combined to keep crude prices below the USD 80/barrel price level that Saudi needs to balance its budget. Saudi’s preference for production restraint clashed with the UAE’s strategic interest in rapidly monetizing its underground wealth to fund a post-oil economy that is oriented towards services and high-tech.
The dramatic timing of the OPEC exit, amidst the fragile ceasefire, deals a new blow to Saudi-UAE relations that had sunk to historic lows in late 2025. The consequences for GCC cohesion during the current crisis and its aftermath will have a lasting effect on regional security coordination and cross-border business between the Gulf’s two biggest economies.
Aysha Chowdhry: A divided GCC, a weaker OPEC, and a more volatile oil market.
The UAE’s exit from OPEC underscores a deeper structural shift: producer unity is giving way to national strategy. Frustration with quotas and a push to expand capacity are colliding with geopolitical pressures (that include the war in Iran and disruptions in the Strait of Hormuz) in a way that makes coordination increasingly untenable.
The political backdrop here matters too. UAE adviser Anwar Gargash’s criticism of “historically weak” Gulf support highlights widening intra-Gulf fractures at a critical moment. Those tensions are also playing out beyond the Gulf, illustrated by Abu Dhabi’s abrupt demand that Pakistan repay USD 3.5 billion. This signals a harder line toward partners seen as insufficiently aligned during the Iran conflict.
This is not just a tactical shift but a clear signal that internal tensions are now overt, with key producers increasingly unwilling to constrain output for collective price management. Taken together, it points to a weaker, more fragmented OPEC and a more volatile oil market, with less centralized control over supply and pricing.
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