Apr 30, 2026 12:52 pm IST

Opinion | Can Saudi Arabia, Now Alone At The Top, Manage To Keep Oil Stable?

With the UAE's exit, Saudi Arabia will remain the only swing producer in the cartel to deal with market shocks. Can it fulfil that role alone?

Mannat Jaspal Mannat Jaspal Columnist

Mannat Jaspal Columnist

The decision of the United Arab Emirates (UAE) to withdraw from the Organization of the Petroleum Exporting Countries (OPEC) and the broader OPEC alliance from May 1, 2026, is not just another policy adjustment to the Hormuz crisis. It reflects a deeper cleavage in the global energy governance architecture that for so long relied on geopolitical stability, shared incentives, and equitable risk-sharing among producer countries. These conditions no longer hold true. Evolving geopolitical and geoeconomics realities have exposed the vulnerability of a decades-old energy system.

The move comes amid a volatile regional conflict and supply disruptions following the Israel-USA-Iran war and the closure of the Strait of Hormuz. Even as the precarious ceasefire holds, supply losses of roughly 10-12 million barrels per day continue to strain the global energy system.

Why The UAE Walked Away

OPEC was established to coordinate oil production among the Middle Eastern energy producers and, by extension, stabilize global crude prices. The model is now under visible strain. While the group still controls a significant portion of global energy output, its share has declined to almost one-third over the years, while the OPEC accounts for a little over 40%.

The UAE contributes almost 12% of total OPEC output, or 3% of global supply, amounting to approximately 3.4 million barrels per day (mbpd). It operates nearly 30% below its installed capacity of 4.85 mbpd - absorbing substantial opportunity costs in line with allotted production quotas. The frustration of underutilised capacity is not new and has been compounded by uneven compliance within the group, with countries like Russia, Iraq and Kazakhstan at times exceeding their allocated targets.

The timing of the UAE's exit is therefore both opportune........

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