The global energy market is currently in a phase of major change after the United Arab Emirates officially withdrew from the Organization of the Petroleum Exporting Countries (OPEC) effective May 1, 2026.
OPEC is an organization that brings together the world's major oil producing countries with the aim of controlling supply to stabilize prices. OPEC's main power lies in the production quota system, where each member country is limited in the amount of output to avoid excess supply that can depress oil prices. Over the decades, this strategy has succeeded in making OPEC the dominant player in determining the direction of global oil prices.
However, internal tensions regarding production quotas were the main reason for the UAE's decision to leave. The country has a high production capacity, around 4.5 million barrels per day, but was previously bound by a lower production limit.
UAE Energy Minister Suhail Al Mazrouei described this move as a strategic necessity to obtain full flexibility in long-term energy planning, especially to maximize returns from large investments in the oil sector.
UAE Targets 5 Million Barrels Per Day by 2027
The main advantage for the UAE after leaving OPEC is the freedom to increase production without quota restrictions. With current production of around 3.6 million barrels per day and capacity reaching 4.5 million barrels, the country has a large space to add supply to the global market. This gives the UAE a competitive advantage over other OPEC countries that are still bound by the production agreement.
The country also plans to increase capacity to 5 million barrels per day by 2027.
From an impact point of view, the UAE's withdrawal is seen as potentially weakening OPEC's ability to control the market. As one of the largest producers, contributing about 13% of OPEC's previous output, the UAE's absence reduces the group's coordination strength. More importantly, the UAE also holds a large portion of spare capacity, which can now be used freely and has the potential to trigger a supply glut in the medium term.
OPEC+ Continues to Increase Production
To offset this situation, OPEC+ reportedly plans to continue to increase production moderately by around 188,000 barrels per day for June. This move reflects a “business as usual” approach, where other member states are trying to maintain market stability even without the UAE’s participation. However, this small increase is seen as insufficient to match the potential additional supply from the UAE if it aggressively increases production.
Looking ahead, the direction of oil prices depends on two main factors: actual supply and geopolitical risks. If the UAE starts to increase production gradually and there are no major disruptions to supply routes such as the Strait of Hormuz, oil prices could potentially experience downward pressure in the medium term. On the other hand, if the conflict in the Middle East continues to escalate and affect supply flows, oil prices could surge despite the excess capacity from the UAE.
While the short-term impact may be limited, the potential for increased supply in the medium term could be a key factor determining the direction of oil prices. In this situation, the market is now focused on the extent to which the UAE will use its new freedoms, and whether OPEC can still maintain its influence in controlling the world energy market.
