UAE to Exit OPEC on May 1 Amid Iran Attacks
This move marks a major shift for the cartel. Iran’s missile and drone attacks have targeted the Gulf state for weeks. Tehran’s blockade of the Strait of Hormuz has choked UAE oil exports. As OPEC’s third-largest producer in February behind Saudi Arabia and Iraq, the UAE’s departure weakens production coordination.
Production Strains Hit Gulf Producers
OPEC+ output fell by approximately 21.6% in March (7.702 million barrels per day), the biggest month-on-month drop on record. The Hormuz blockade has trapped oil shipments. This cuts off about one-fifth of global oil supply. Saudi Arabia, Iraq, Kuwait and the UAE saw combined drops of over 8 million barrels per day in March. Gulf OPEC+ members combined (Saudi Arabia, Iraq, Iran, Kuwait, UAE, and Bahrain) saw a combined decrease of just over 8 million barrels per day in March. Iran’s strikes damaged energy infrastructure in Qatar, Saudi Arabia and Kuwait. Repair costs run high. Disruptions will last months.
OPEC+ plans a symbolic quota hike of 206,000 barrels per day for May. Actual output stays constrained. Key members agreed to slight boosts earlier. However, war limits real gains. OPEC kept unchanged its forecast that world oil demand will rise by 1.38 million bpd in 2026. For Q2 2026 specifically, OPEC projected global oil demand at 105.07 million bpd. A supply deficit looms if Gulf production stays low.
Cartel Faces New Pressures
The UAE joined OPEC in 1967, soon after its 1960 founding. Now it exits after reviewing its policy and capacity. The energy ministry cited national interests and market needs. OPEC+ output, including Mexico, hit 35.055 million barrels per day in March, down sharply. Only Venezuela and Nigeria raised production.
Gulf economies lose billions in oil revenue despite price spikes above $100 per barrel. The US eyes dollar support for the UAE via currency swaps. Yet Abu Dhabi denies any need.
Investors should watch OPEC+ quota talks and US moves on Hormuz. Any output recovery signals could stabilise prices and lift Gulf assets.
