The United Arab Emirates (UAE) announced on 28/4 that it would withdraw from the Organization of the Petroleum Exporting Countries (OPEC) and the OPEC+ alliance, effective 1/5. Analysts on CNBC called this shocking news, as the UAE is the second most influential country in OPEC, after Saudi Arabia. It is also one of the few members with significant spare capacity, allowing OPEC to respond flexibly to supply shocks. The UAE's departure is therefore a major blow to the organization, which has for many years regulated production for the world's top oil-producing countries.

OPEC was founded in 1960 in Baghdad by Iraq, Iran, Kuwait, Venezuela, and Saudi Arabia. At that time, seven Western multinational companies dominated the global oil market, controlling production and setting oil prices.

OPEC's initial objective was to assert sovereignty over its natural resources while ensuring fair and stable prices for oil-producing nations and a reliable supply for consuming countries. Currently, the organization comprises 12 members, primarily from the Middle East. Excluding the UAE, OPEC members will include Saudi Arabia, Algeria, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, and Venezuela.

During the 1973 conflict with Israel, Arab nations within OPEC imposed an embargo on the United States and other countries supporting Israel by halting oil exports to them. This embargo significantly pressured the US economy, which was heavily reliant on imported oil. Oil prices surged, driving up fuel costs and causing supply shortages. This policy also pushed the United States and many other nations to the brink of recession.

First OPEC conference. *Photo: OPEC*

In the 1970s, OPEC contributed to half of the global crude oil supply before new sources, such as the North Sea, emerged. In subsequent decades, its global market share hovered around 30-40%. However, the record growth of rivals, particularly the United States, gradually eroded this share.

In 2016, OPEC expanded its influence by forming the OPEC+ alliance with 10 other countries, including Russia. According to the International Energy Agency (IEA), the group's market share subsequently increased to 51,15 million barrels per day, equivalent to 50% of global oil and liquid production. By the end of March, one month after the Middle East conflict erupted, this share had fallen to 44%.

OPEC+ states that it balances the market by increasing or decreasing oil production. The alliance consistently denies criticism that it manipulates prices. The organization meets multiple times a year to assess the market, decide production levels for the coming months, and allocate detailed quotas to each member.

US President Donald Trump once accused the organization of "exploiting the rest of the world" by driving up oil prices. However, he also played a role in convincing OPEC+ to reduce production in mid-2020 during the pandemic. At that time, low crude oil prices caused significant losses for US oil companies. OPEC's production cuts nearly doubled Brent crude prices in the second half of that year.

Late 2022, after a period of normalizing production, OPEC+ again reduced output to prevent market oversupply and price drops, which would harm member countries dependent on oil exports. Including both bloc-wide and voluntary cuts, the group's reductions peaked at 5,85 million barrels per day in March 2025. Nevertheless, this plan did not achieve significant results, with Brent crude prices trading within a narrow range of 70-80 USD for most of 2024.

From April 2025, OPEC+ production gradually increased. Analysts believe this move not only aims to penalize OPEC+ countries that benefited from high prices but violated production quotas, but also to pressure the US shale oil industry to regain lost market share.

Oil and liquid fuels production of OPEC member countries in 2025 (Unit: million barrels/day). *Chart: EIA, OPEC, AP*

The UAE is currently the third largest producer in OPEC and the fourth largest in OPEC+. It is the latest and largest member to withdraw from OPEC in recent years. Previously, Angola, Ecuador, and Qatar also left. Indonesia decided to suspend its membership in 2016. Angola cited disagreements over production quotas as its reason for withdrawal. Indonesia and Ecuador similarly explained their desire to avoid OPEC's quota restrictions.

Analysts suggest that the UAE's departure could cause disruption and weaken OPEC. "This is a major turning point for the organization," stated Jorge Leon, head of geopolitical analysis at consulting firm Rystad. He noted in his report, "Beyond Saudi Arabia, the UAE is one of the few members with significant spare capacity, which helps the group impact the market and respond to supply shocks."

The current OPEC production quota applied to the UAE is 3,2 million barrels of crude oil per day. However, the country has the capacity to produce up to 5 million barrels, according to Robin Mills, CEO of consulting firm QamarEnergy, speaking on CNN. This potential increase represents 1-2% of global oil demand. In its 28/4 announcement, UAE Energy Minister Suhail Al Mazrouei also stated the country's ambition to reach a production level of 5 million barrels per day by 2027 and its desire for greater freedom to pursue this goal.

Outside OPEC headquarters in Vienna, Austria, May 2024. *Photo: Reuters*

However, analysts believe the impact of the UAE increasing its oil production is unlikely to occur in the short term. The oil market is currently experiencing unprecedented disruption due to the Hormuz Strait blockade since the beginning of the conflict. OPEC reported that crude oil production from Gulf countries in OPEC+ decreased by nearly 8 million barrels per day in March compared to the previous month, as Saudi Arabia, the UAE, Kuwait, and Iraq all had to reduce production due to export limitations.

Beyond Hormuz, Saudi Arabia currently utilizes an oil pipeline with a capacity of 7 million barrels per day via the Red Sea. The UAE can also export 1,5-1,8 million barrels per day through a pipeline connecting to Fujairah port. However, these routes cannot fully compensate for the shortfall if the Hormuz Strait closes.

In 2025, OPEC's crude oil exports accounted for approximately 47% of global seaborne crude oil exports, according to data firm Kpler. By March, this proportion had fallen to nearly 35%.

On Reuters, several analysts shared the view that after the conflict concludes, OPEC will find it difficult to control oil prices as it has in the past.

"In the short to medium term, the market can absorb additional oil from the UAE, given declining global inventories and rising demand to replenish reserves. However, in the long term, this departure raises a strategic question: if other producing countries begin to prioritize market share over quota compliance, OPEC's ability to regulate the market through cooperative supply adjustments could be called into doubt," concluded Ole Hansen, an analyst at Saxo Bank.

Ha Thu (according to Reuters, CNN, CNBC)