The United Arab Emirates (UAE) has officially declared its decision to withdraw from the Organization of the Petroleum Exporting Countries (OPEC) and the broader OPEC alliance, with the exit taking effect on May 1, 2026. By exiting OPEC, the UAE is no longer bound by production quotas and plans to increase output from 3 million to 5 million barrels per day (bpd) by 2027. This increased supply creates downward pressure on global crude prices, directly lowering India's massive oil import costs. In terms of strategic goal, the UAE plans to ramp up its oil production to 5 million bpd by 2027 to monetise its reserves faster and fund its long-term economic diversification.

Interestingly enough, the UAE Energy Minister Suhail Al Mazrouei said that the "policy decision" was made without consulting Saudi Arabia or other OPEC members. As the announcement came to light, oil prices initially dipped on news of a potential supply glut but rebounded as the US-Iran war and the Strait of Hormuz blockade continued to risk premiums. In terms of supply constraints, the Strait of Hormuz crisis prevents the UAE from exporting at full capacity, meaning the practical impact of the exit will be more pronounced once shipping routes reopen.

UAE’s exit from OPEC has weakened the latter’s capacity to keep the prices of crude stabilised. The move is expected to also bring in structural weaknesses for OPEC as the oil........

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