UAE to Exit OPEC, Reshape Its Energy Policy Approach

The United Arab Emirates (UAE) has announced its decision to withdraw from the Organization of the Petroleum Exporting Countries (OPEC) after more than five decades of membership. The decision will take effect on May 1.

The announcement was issued as OPEC prepared to convene in Vienna on Wednesday. The UAE confirmed it will also leave the broader OPEC+ alliance.

"This decision follows a comprehensive review of the UAE’s production policy and its current and future capacity and is based on our national interest and our commitment to contributing effectively to meeting the market’s pressing needs," UAE state news agency Wam reported.

According to Wam, the decision "reflects a policy-driven evolution in the UAE’s approach, enhancing flexibility to respond to market dynamics while continuing to contribute to stability in a measured and responsible manner."

The move aligns with a significant diversification effort within the UAE’s economy, where the non-oil sector now represents approximately 75 percent of the country's GDP. Despite this, the UAE has expressed ambitions to increase oil production capacity from 3.4 million barrels per day to five million by 2027.

"We reaffirm our appreciation for the efforts of both OPEC and the OPEC+ alliance and wish them success," Wam stated. "During our time in the organisation, we made significant contributions and even greater sacrifices for the benefit of all. However, the time has come to focus our efforts on what our national interest dictates and our commitment to our investors, customers, partners and global energy markets. This is what we will focus on going forward."

The UAE further emphasized its commitment to "responsibility and market stability, taking into account global supply and demand," while noting it will continue investing across the energy value chain, including oil, gas, renewables, and low-carbon solutions to sustain resilience and transformation in the energy sector.

Impact of War on Oil

Recent conflicts in the region have deeply affected global oil markets. The Iran war caused a loss of 7.88 million barrels per day of OPEC’s production in March, marking the largest supply collapse within the organization in recent decades. OPEC's overall production declined by 27 percent to 20.79 million barrels per day that month.

This supply shock eclipsed the 6.28 million barrels per day reduction recorded in May 2020 when the COVID-19 pandemic severely impacted global oil demand. It similarly exceeds the drop in production associated with the 1970s oil crisis and the 1991 Gulf War.

Founding Member's Departure

The UAE's departure represents a milestone for the organization. A founding member, the UAE joined OPEC in 1967, four years before the establishment of the nation. Alongside Saudi Arabia and Kuwait, the UAE has played a crucial role in supplying oil from the Middle East, which accounts for 30 percent of global production.

The UAE’s move follows Qatar’s exit from OPEC in 2019. Qatar cited its leadership as a gas producer as the rationale for leaving the group. While Bahrain and Oman remain outside of OPEC, both continue to align with the group’s supply management strategies.