The United Arab Emirates (UAE) is now free to determine its own oil production after leaving OPEC on May 1, 2026. In theory, the decision opens up space for Abu Dhabi to pump more oil, increasing global supply and putting pressure on prices.
However, almost four months after the UAE left the oil-producing group, oil prices remain high. Brent is currently trading around US$95 a barrel in early September after tensions between the United States (US) and Iran escalated again.
The question is, if the UAE is now free to increase production, why haven't oil prices fallen significantly?
UAE Has Started Increasing Production
The UAE previously produced an average of around 3.4 million barrels per day (bpd) in 2025, with an estimated effective capacity of around 4.2 million bpd. While still in OPEC+, some of that capacity was unused because Abu Dhabi had to comply with the group's production targets.
UAE crude oil production rose to around 3.8 million bpd in June, according to figures reported by Abu Dhabi. The International Energy Agency (IEA) estimated that UAE production reached a record of around 4.1 million bpd in the same month. This suggests that the UAE does indeed have the capacity to increase production when it is no longer bound by OPEC quotas.
In fact, the UAE's withdrawal has also reduced OPEC+'s influence. According to a Reuters report, the group's share of world oil production fell from more than 48% before the Iran war to around 40% in July, with about four to five percentage points of the decline attributable to the UAE's exit.
The Problem Is Not How Much Oil Can Be Pumped
The biggest challenge now lies in how to get that oil to buyers. Most of the Gulf state's oil exports depend on the Strait of Hormuz, a narrow passage between Iran and Oman that normally carries about a fifth of the world's oil and liquefied natural gas supplies. US-Iran tensions have caused shipping traffic through the route to fall sharply.
Kpler data shows exports through Hormuz in August were just around 2.3 million bpd compared to 15.82 million bpd before the conflict. Asian crude imports were around 23.12 million bpd in August, still well below the pre-war average of 26.91 million bpd.
On September 2, only four commodity ships were recorded passing through Hormuz, compared to a 10-day average of around 13. Tensions have risen again after the US attack on Iran and Tehran’s response. This has created a significant gap between production capacity and the supply that actually reaches the market.
The UAE may be able to pump more oil, but the extra barrels won’t have the maximum impact on prices if shipments from the Gulf remain disrupted.
Why is Brent still around US$95?
XBRUSD chart by Saracen Markets
Price movements since April have shown how geopolitical influence has affected the oil market. After the UAE announced its withdrawal from OPEC on April 28, Brent was around US$114.60 a barrel the next day. When the UAE’s withdrawal took effect in early May, Brent briefly surged above US$126 as markets grew concerned about Middle East supply disruptions.
As shipping conditions improved and UAE supplies rebounded in June, Brent then fell to around the US$70s. But prices rebounded as geopolitical risks re-emerged. In July, the announcement of US naval sanctions on Iran sent Brent soaring almost 10% in one session to US$83.30 a barrel.
The latest tensions in early September brought Brent back to around US$95 a barrel. This suggests that the market is now placing a geopolitical premium on oil. The risk of losing millions of barrels of supply through Hormuz outweighs the additional production that the UAE could provide after leaving OPEC.
What Happens If Hormuz Returns to Normal?
This is where the UAE’s decision to leave OPEC could start to have a bigger impact. If Hormuz traffic returns to normal levels, the UAE could not only increase production without the need for OPEC+ approval, but the oil could also return to international markets more smoothly.
At the same time, the remaining OPEC+ members are also gradually increasing supply. The combination of higher UAE production, increased OPEC+ supply and the recovery of exports through Hormuz has the potential to change the market structure from undersupply to oversupply.
The risk is greater if Chinese demand remains weak. Reuters reports that reduced Chinese imports are among the main factors now balancing the market as Middle Eastern supplies are disrupted.
For now, the UAE has the freedom to produce more oil. What it doesn’t have yet is a truly normal export route. That’s why the UAE’s withdrawal from OPEC has not produced the price collapse that one might have expected. As long as Hormuz remains the bottleneck in global oil supply, geopolitics will still have a greater influence on prices than the amount of oil the UAE can pump.
