The UAE announced its withdrawal from OPEC and OPEC+ effective May 1, planning to gradually increase oil production, with Trump potentially emerging as the 'big winner'.

This article is compiled from Wall Street News and Jinshi.

The United Arab Emirates has announced that it will officially withdraw from OPEC and OPEC+ on May 1, ending a sixty-year membership history. This decision marks the departure of one of the world’s major oil-producing countries from the current international oil production coordination framework, prompting a reassessment of the global oil supply landscape.

The UAE Ministry of Energy and Infrastructure stated in a declaration that this withdrawal decision was made in consideration of national interests following a comprehensive review of the country's production policies and capacities, and noted that the country would gradually increase its output. The statement also expressed, "We reaffirm our gratitude for the efforts of OPEC and the OPEC+ alliance and wish them success."

Following the announcement of the withdrawal, international oil prices briefly dropped but quickly recovered. As of Tuesday, Brent crude futures were at $111.10 per barrel, with a single-day increase of 2.7%. Analysts warned that as OPEC's ability to adjust supply imbalances diminishes, oil market volatility is expected to rise.

This withdrawal occurs at a critical time when the global energy market is under pressure — the US-Israel war against Iran and Iran’s subsequent blockade of the Strait of Hormuz have triggered the most severe energy crisis in decades. Approximately one-fifth of global oil and gas supplies pass through this strait.

The accumulation of production capacity conflicts over many years had long foreshadowed the UAE’s withdrawal.

The UAE joined OPEC in 1967, seven years after the organization was founded. As the third-largest oil producer within OPEC, behind only Saudi Arabia and Iraq, the UAE has continuously sought to expand its oil exports and made substantial investments in production capacity in recent years.

However, OPEC's quota mechanism has long constrained the UAE’s plans to increase production. According to Bloomberg, the UAE’s desire to expand its production capacity has repeatedly clashed with Saudi Arabia during OPEC meetings. Disagreements between the two countries once pushed Abu Dhabi to the brink of withdrawal, though no action was ultimately taken.

This time, the UAE stated that the withdrawal would help it address structural changes in demand and remove obstacles to gradually unleashing new production capacity.

Iran’s blockade of the Strait of Hormuz and the war have accelerated the strategic shift.

The US-Israel war against Iran and Iran’s blockade of the Strait of Hormuz are important background factors for the UAE’s withdrawal. The blockade not only severely limited the UAE’s oil export capacity, directly threatening its economic foundation, but also caused a complete rupture in relations between the UAE and Iran, another OPEC member.

Prior to the announcement of its withdrawal, the UAE had been subjected to weeks of missile and drone attacks from Iran. This Middle Eastern conflict has also exacerbated geopolitical rifts within OPEC, bringing the contradictions between Gulf Arab states and Iran into the open.

Meanwhile, relations between the UAE and Saudi Arabia have grown tense due to the war. According to Bloomberg, the two countries supported opposing factions in Yemen's civil war earlier this year, further intensifying bilateral friction.

According toXinhua News AgencyAccording to a report by the American Bloomberg News Agency on the 28th, a state-owned oil company of the United Arab Emirates has notified some of its long-term customers that they can extract goods in May via ship-to-ship transfers at the Port of Fujairah outside the Persian Gulf. This indicates that UAE tankers have broken through the “dual blockade” imposed by Iran and the United States and crossed the Strait of Hormuz.

Structural weakening of OPEC increases market volatility risks

Jorge León, Head of Geopolitical Analysis at Rystad Energy and a former OPEC employee, stated that with the loss of the UAE, OPEC will be "structurally further weakened" as Saudi Arabia is currently the only member state with significant spare capacity. León also pointed out that OPEC’s reduced ability to smooth supply imbalances will increase volatility in the oil market.

Notably, OPEC’s influence had already been eroding prior to the UAE’s withdrawal, primarily due to the substantial increase in production by non-OPEC oil-producing countries, led by the United States over the past decade.

However, even with the UAE’s formal departure, the broader OPEC+ alliance will still account for approximately 40% of global oil production, meaning its overall influence on international oil prices will not disappear overnight.

UAE announces withdrawal; Trump may become the 'biggest winner'

As a long-standing member of OPEC, the UAE’s unexpected announcement to withdraw could plunge the organization into disarray and weaken its influence – despite internal disagreements on issues ranging from geopolitics to production quotas, OPEC typically strives to present a united front. This could be considered a significant victory for President Trump.

Trump has accused the organization of “extorting the rest of the world” by inflating oil prices. He also linked U.S. military support for the Gulf region to oil prices, stating that while the U.S. defends OPEC members, they “exploit this by setting high oil prices.” As a regional commercial hub and one of Washington’s most important allies, the UAE had previously criticized other Arab countries for failing to take sufficient measures to protect it from repeated Iranian attacks during the war.

Editor/Lambor