UAE Announces Withdrawal from OPEC Effective May 1, Citing Production Constraints and Strategic Priorities

The UAE announced via its state-run WAM news agency that it would withdraw from both OPEC and the OPEC+ group, effective May 1. In its statement, the country said the decision "reflects the UAE's long-term strategic and economic vision and evolving energy profile, including accelerated investment in domestic energy production," and that it would bring "additional production to market in a gradual and measured manner, aligned with demand and market conditions."

The UAE's frustration with OPEC production quotas had been building for years, according to AP. The country had been producing around 3.4 million barrels of crude oil per day before the U.S.-Israeli war with Iran began on February 28, while analysts say it has capacity to produce roughly 5 million barrels per day. Capital Economics, cited by AP, wrote that "the bigger picture is that the UAE has been itching to pump more oil." NPR reported that the UAE had long expressed frustration with the quota system governing OPEC members.

The withdrawal removes a significant producer from OPEC's ranks. Jorge Leon, head of geopolitical analysis at Rystad Energy, told AP that the UAE is one of OPEC's few members with the ability to quickly increase production. "A structurally weaker OPEC, with less spare capacity concentrated within the group, will find it increasingly difficult to calibrate supply and stabilize prices," he said. AP also noted that OPEC's market power had already been waning as U.S. crude production surpassed 13 million barrels per day, compared to Saudi Arabia's roughly 10 million before the Iran war.