The government statement, published on the official Emirates News Agency (WAM), pointed to a comprehensive review of the country’s production policy and production capacity as the basis for the move, describing it as a reflection of the UAE’s “long-term strategic and economic vision and its evolving energy profile.”
She said that the decision is rooted in the national interest and commitment to meeting what she described as the “urgent needs” of the market, in reference to global demand that the UAE believes is not sufficiently met at a time when it is suffering from major supply disruptions.
The statement acknowledged the geopolitical backdrop – including the ongoing conflict with Iran that has severely restricted tanker movements through the Strait of Hormuz, the narrow waterway between Iran and Oman through which nearly a fifth of the world’s crude oil and liquefied natural gas usually passes.
The US Energy Information Administration estimates that Iraq, Saudi Arabia, Kuwait, the UAE, Qatar and Bahrain shut down 7.5 million barrels per day of crude oil production in March, and 9.1 million barrels per day in April.
However, the statement described the exit as policy-driven rather than reactionary, noting that “underlying trends point to sustained growth in global energy demand over the medium to long term.”
Long-standing dispute
Tuesday’s announcement was not without precedent. In 2021, the UAE refused to agree to a production agreement to extend cuts to production unless its individual quota was increased, arguing that it had invested billions to expand production capacity and was unfairly constrained by numbers set in 2018. A compromise was eventually reached, but the incident revealed a fundamental tension: the UAE wanted to produce more, and OPEC’s quota system was holding it back.
This ambition has grown since then. Abu Dhabi National Oil Company, a state-run entity, aims to produce 5 million barrels per day by 2027, up from current production of about 3.4 million. Under the OPEC+ deal, the country retained nearly 3.2 million barrels per day while its production capacity was more than 4 million, a gap that made it increasingly difficult to justify continued membership.
The UAE stressed that its exit does not indicate a retreat from global energy responsibility. It pledged to bring additional production to market “in a gradual and measured manner, in line with demand and market conditions,” and reaffirmed investment plans in oil and gas, renewable energy and low-carbon technologies.
The statement indicated that OPEC’s departure would make the country more flexible to respond to market dynamics. OPEC sets production limits, which means that the world’s major producers can often supply and sell more oil than they actually do.
By limiting supply, the group can support prices. This mechanism primarily benefits producers that rely heavily on oil revenues, a description that fits Saudi Arabia much better than the United Arab Emirates, whose non-oil economy now represents nearly 75% of GDP.
Market reaction and broader implications
The immediate market response was sharp. Brent crude, the European benchmark, surpassed $100 a barrel for the first time since April 8, rising to $111 as of writing.
The longer-term repercussions for OPEC are more important. The group has been under pressure for months, with several members – including Iraq, Kazakhstan and the United Arab Emirates – overproducing their quotas and demanding compensation. The UAE’s departure deprives the group of its third largest producer at a time when supply dynamics are already fragile.
The exit comes after Qatar left the group in 2019 and comes as OPEC prepares for a meeting in Vienna, Austria, on Wednesday.
“It is time to focus our efforts on what is dictated by our national interest and our commitment to our investors, customers, partners and global energy markets,” the statement read.
The UAE said that it appreciates more than five decades of cooperation within OPEC, and wishes the organization success in the future.
This story originally appeared on WIRED Middle East.
