Why did UAE decide to exit OPEC? Government officials, industry experts reveal reasons behind move

Dubai: The UAE will exit the Organization of the Petroleum Exporting Countries and the broader OPEC+ alliance effective May 1, 2026, a move officials say is aligned with long-term energy strategy while analysts point to wider market implications.

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The decision ends nearly six decades of UAE participation in coordinated oil production policy. The country joined OPEC in 1967 through Abu Dhabi and remained a member after the federation was formed in 1971, contributing alongside producers such as Saudi Arabia and Kuwait to Middle East oil output, which accounts for roughly 30% of global supply.

State news agency WAM said the move follows a review of production policy and capacity, aimed at enhancing flexibility in responding to market demand while continuing to support global energy stability.

‘Policy decision’

OPEC and OPEC+ have historically coordinated supply through production quotas. The UAE’s exit removes it from these agreements, allowing it to determine output independently.

The country plans to expand production capacity from about 3.4 million barrels per day to 5 million barrels per day by 2027, supported by upstream investment.

UAE Energy Minister Suhail Mohamed al-Mazrouei said the move followed a review of national energy strategy. “This is a policy decision, it has been done after a careful look at current and future policies related to level of production,” he told Reuters, adding that the UAE did not raise the issue with other countries.

‘Careful, long review’

In an interview with CNBC, Al Mazrouei said the decision was taken after “a very careful and long review” of policy. “The decision to be outside any constraint is something that important for us to ensure that we are attaining at the market condition, at the right time and at the right pace,” he said.

He added that timing was chosen to minimise disruption. “We believe that the world is currently under supplied, and our exit at this time is the right time for it, because it will have a minimum impact on the price.”

Speaking to CNN, he linked the timing to shipping constraints. “Timing is right because it will not significantly impact the market and the price because the Strait of Hormuz is closed and restricted,” he said, describing the move as a “sovereign national decision.”

Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and ADNOC CEO, said the decision reflects a sovereign approach aligned with long-term strategy and market stability.

Supply disruption

Analysts said the timing reflects both policy shifts and geopolitical conditions.

Ole Hansen, Head of Commodity Strategy at Saxo Bank, said the UAE had “seized the opportunity to exit OPEC, removing the production quota straitjacket that for years frustrated the oil-rich nation.”

“In the short- to medium term, the market should be able to absorb additional UAE barrels,” he said, adding the move raises questions about OPEC’s ability to manage markets if producers prioritise market share.

Recent data shows OPEC production fell 27% to 20.79 million barrels per day in March after disruptions removed 7.88 million barrels per day from supply.

Michael Brown, Senior Research Strategist at Pepperstone, said the timing was notable. “In many ways, the main surprise… is in its timing, as opposed to its substance.”

“As the US-Iran conflict continues, and the Strait of Hormuz remains impassable, the most significant issue… is not production, but actually shipping product,” he said, adding supply constraints are tightening.

Dr Sahitya Chaturvedi, Secretary General of the Indian Business & Professional Council Dubai, said the move comes amid elevated market conditions. “With Brent crude at $111–113/bbl and WTI above $100/bbl, alongside a global supply disruption of over 10 million bpd… this may drive short-term volatility, but also enhances future supply responsiveness.”

The UAE said it will continue engaging with producers and consumers while operating outside OPEC and OPEC+.