Industry

The UAE's move will impact the cohesion of OPEC. (Image source: Adobe Stock)

Oil markets are absorbing a structural shock following the United Arab Emirates’ decision to exit OPEC after six decades, says Nigel Green, CEO of deVere Group

The move strikes at the cohesion of a group long relied upon to shape global supply and pricing, affirms the CEO of one of the world’s largest independent financial advisory organisations.

Oil prices edged higher on the news but stopped short of a breakout, with Brent crude trading around US$111 a barrel after briefly approaching US$120 amid escalating tensions involving Iran and disruption risks in the Strait of Hormuz.

Green comments, “A core pillar of oil market stability has been removed by this unexpected move.

“The UAE is not a marginal player. It’s one of the very few producers with both meaningful spare capacity and the operational flexibility to bring barrels online quickly, which has been critical to how OPEC has managed supply and influenced pricing.

“Removing that capacity from a coordinated structure is likely to create a more fragmented supply outlook at a point where markets are already under pressure from the US-Iran war and constrained shipping routes.”

“Oil is trading higher, but the reaction has, so far, been pretty measured.

“Markets are already looking beyond the headlines to what this means for future supply. There’s no immediate loss of barrels, so the move reflects uncertainty pricing rather than a genuine supply shock.

“Near-term disruption risk is pushing prices up, while the prospect of weaker producer coordination is limiting how far that rally extends.”

Short term, conflict risk remains dominant. Any sustained constraint through Hormuz keeps crude firmly supported, and a return toward US$120 remains “entirely plausible” if tensions intensify or shipping flows are disrupted further.

Structural implications

Focus is shifting toward the structural implications for OPEC’s influence. The group’s pricing power has long depended on a small number of members with spare capacity acting in coordination, particularly Saudi Arabia and the UAE. A divergence between those producers weakens that model.

Green says, “Medium term, the balance shifts. A less cohesive OPEC reduces the credibility of production caps and forward guidance. The UAE has both the economic incentive and the technical capacity to increase output independently, especially as producers seek to maximise revenues during a period of still-strong demand.”

Global oil consumption remains near record levels at more than 102 million bpd, supported by demand from major Asian economies and a continued recovery in aviation. Supply growth outside Opec has been inconsistent, leaving markets exposed to internal fractures among exporters.

“Additional UAE supply over the next 12 to 24 months would, we expect, begin to reshape pricing dynamics.

“Assuming geopolitical tensions stabilise, crude could move back into an US$80 to US$95 range as incremental barrels come through. Volatility, however, becomes embedded because coordination risk does not disappear.”

Geopolitical dimension

The geopolitical dimension extends beyond energy markets.

The UAE’s repositioning comes alongside closer financial engagement with the US.

President Trump has repeatedly criticised OPEC’s role in sustaining higher oil prices, and recent discussions around potential currency support arrangements between US and UAE authorities point to deeper strategic alignment.

“Stronger ties between the UAE and the US introduce a different layer of influence,” notes the deVere chief executive.

“Energy strategy, liquidity support, and currency stability begin to intersect. A major producer stepping outside cartel constraints while strengthening bilateral economic links with Washington alters how global markets interpret supply signals.”

Longer-term implications are tied to the trajectory of global energy demand and the economics of production. Low-cost producers with expansion capacity face increasing pressure to accelerate output while demand remains structurally high.

Green explains, “Longer term, this reflects a strategic shift already underway.

“Producers with scale and low extraction costs are prioritising volume, aiming to monetise reserves before demand eventually plateaus. Sustained collective discipline becomes far harder to maintain and competitive pressure increases across the market.”

Markets are already responding across asset classes. Energy equities have moved higher alongside crude, while inflation expectations remain sensitive to prolonged oil strength given the direct pass-through to transport and industrial costs.

Green concludes, “Energy markets are becoming harder to read.

“Fewer shared decisions, more independent moves, and rising geopolitical pressure mean prices will likely swing more and adjust faster.”

UAE's exit from OPEC will take effect on 1 May 2026

The United Arab Emirates announced today its decision to withdraw from the Organisation of the Petroleum Exporting Countries (OPEC) and the OPEC+ alliance, with the exit taking effect on 1 May 2026.

According to an official statement, the move follows a comprehensive review of the UAE’s production policy, current and future capacity, and is guided by national interest and the need to respond effectively to global market demands.

Following the exit, the UAE said it will continue to act responsibly by bringing additional production to market gradually and in alignment with demand.

It reaffirmed its position as a trusted producer of cost-competitive and lower-carbon barrels that can support both global economic growth and emissions reduction goals.

The country emphasised that the decision does not change its commitment to global market stability or cooperation with producers and consumers. Instead, it will enhance its ability to respond more effectively to evolving market needs.

"We reaffirm our appreciation for the efforts of both OPEC and the OPEC+ alliance and wish them success. During our time in the organisation, we made significant contributions and even greater sacrifices for the benefit of all," the statement read, adding, "However, the time has come to focus our efforts on what our national interest dictates and our commitment to our investors, customers, partners and global energy markets. This is what we will focus on going forward." 

The news will no doubt come as a blow to OPEC at a time of ongoing market disruption and geopolitical uncertainty due to the US/Iran war. The loss of the UAE, with its 4.8mn bpd of spare capacity, could have the effect of diminishing OPEC’s production co-ordinating role and its ability to stabilise the market.

"As oil demand approaches a peak and begins to decline, incentives shift. Producers with spare capacity may prioritise monetising reserves and protecting market share over collective restraint," said energy consultancy Rystad Energy. The UAE, with its spare capacity and room to increase output, is particularly well positioned to pursue such a strategy outside the Group.

Head of Geopolitical Analysis at Rystad, Jorge Leon commented, "OPEC and OPEC+ have only ever been as strong as the members' willingness to hold barrels back from the market, and the UAE was one of those. Losing a member with 4.8 million barrels per day of capacity, and the ambition to produce more, takes a real tool out of the group's hands.

"The timing tells you something about where the oil market is going. With demand nearing a peak, the calculation for producers with low-cost barrels is changing fast, and waiting your turn inside a quota system starts to look like leaving money on the table.

"Saudi Arabia is now left doing more of the heavy lifting on price stability, and the market loses one of the few shock absorbers it had left."

"For OPEC+, this is a blow to unity and to Saudi Arabia’s ability to marshal producer discipline," commented Sam North, market analyst at eToro. "It does not mean a price war starts tomorrow, but it raises the risk that one emerges if others decide to defend market share. In trading terms, this adds a new volatility premium: more potential supply, less cartel discipline, and a Gulf energy map that suddenly looks a lot less predictable.”

The majority of energy, oil and gas organisations expect supply chain risk levels to increase over the next 12-24 months. (Image source: Adobe Stock)

The majority of energy, oil and gas organisations expect supply chain risk levels to increase over the next 12-24 months with the ongoing volatility across global energy markets, according to new research from Achilles, a global leader in supply chain risk and performance management

The findings, drawn from 303 global energy, oil and gas respondents within the Achilles Global Supplier Risk and Sustainability Survey, also highlight that visibility across supplier networks remains a key challenge. Only 5% of organisations report full visibility on their extended supplier networks, while 64% report only limited or zero visibility. This suggests that many energy companies are operating without a reliable view of their supply chains, despite increasing compliance requirements and operational pressures.

While most organisations report only minor or occasional supplier-related disruptions over the past two years, a small proportion of respondents reported disruption costs exceeding US$10mn, pointing to the potential for high-impact events across critical supply chains.

The research also highlights the role of regulation and compliance in supply chain strategy. Legislation and regulatory pressure were identified as key drivers of sustainability action, alongside carbon reporting requirements and cost considerations. As companies operate across multiple jurisdictions, maintaining consistent supplier standards and compliance requirements remains a challenge.

At the same time, confidence in supplier readiness varies. Most organisations report being mostly or moderately confident in the accuracy of supplier‑reported information, while only a small minority express very high confidence, indicating potential compliance and operational risk.

The findings also highlight growing interest in artificial intelligence within procurement and supplier risk management. Over two-thirds of organisations report that they are either exploring or piloting AI use cases, with expected benefits including improved efficiency, stronger decision-making and improved supplier data accuracy. However, adoption remains at an early stage.

Adam Whitfield, head of Global Compliance and ESG at Achilles, said, “The energy sector is currently operating in a highly disrupted environment, with supply constraints, geopolitical instability and market volatility placing significant pressure on operations.

“In that context, visibility across supplier networks becomes increasingly important. Our findings show that many organisations still lack full visibility across their extended supply chains, which can limit their ability to respond effectively when disruption occurs.

“Managing risk in this environment requires more than periodic checks. As these pressures continue, strengthening supplier oversight and improving visibility will be critical to maintaining operational resilience and managing risk to ensure issues are identified early and managed effectively.”

Overall, the data points to a gap between increasing supply chain risk and organisations’ ability to monitor and manage it effectively. As energy companies continue to operate across complex supplier networks, improving visibility and strengthening oversight will be critical to maintaining compliance and managing risk.

The closure of the Strait of Hormuz removed almost 20% of global LNG supply from the market . (Image source: Adobe Stock)

The IEA’s latest quarterly gas market report shows the extent to which the Middle East crisis is disrupting international natural gas markets and delaying a significant amount of new LNG capacity that had been on track to come online in the second half of this decade

The disruption to shipping through the Strait of Hormuz since the start of March has created unprecedented uncertainty, removing close to 20% of global LNG supply from the market and triggering sharp price increases across key importing regions. In March, natural gas prices in Asia and Europe rose to their highest levels since January 2023, contributing to a contraction in natural gas demand in key LNG importing markets.

Global LNG production declined in March by 8% year-on-year, with a sharp drop in exports from Qatar and the United Arab Emirates only partially offset by higher output from other regions. As the disruptions began to spread through global supply chains, LNG deliveries also fell, with a steeper decline observed in April. The impacts of the supply losses are partly mitigated by the strong increase in non-Qatari LNG supply, including the start-up of new LNG liquefaction plants for which investment decisions were taken several years ag

Natural gas demand has weakened in key importing markets in response to higher prices, milder weather and policy measures aimed at reducing gas consumption. In Europe, natural gas demand declined by around 4% year-on-year in March, largely driven by stronger renewable electricity generation. Several Asian countries are implementing fuel-switching and demand-side measures to limit gas use amid the supply crisis.

Beyond the immediate disruption, the crisis is expected to tighten the markets in the medium term, with damage to LNG trains in Qatar set to reduce projected supply growth and delay the impact of the anticipated global LNG expansion wave by at least two years. The combined effect of short-term supply losses and slower capacity growth could result in a cumulative loss of around 120 billion cubic metres of LNG supply between 2026 and 2030, around 15% of the expected global LNG supply over this period. While new LNG projects in other regions are expected to offset these losses over time, the impact will prolong tight markets through 2026 and 2027.

The report highlights the importance of strengthening global gas supply security through continued investment across the LNG value chain and enhanced international cooperation between producers and consumers. It also notes the advantages that a diversified portfolio of long-term contracts can bring for gas importers in terms of mitigating price volatility in periods of disruption