Abu Dhabi prioritizes its oil production ramp-up plan worth $150B production over Saudi-led quotas, the 60-year-old oil cartel faces its biggest existential threat
The landscape of the global oil industry changed forever this week. On April 28, 2026, the United Arab Emirates (UAE) officially announced its departure from OPEC and the expanded OPEC+ alliance, effective May 1, 2026.
The First Question that comes to mind is: What are OPEC and OPEC+?
OPEC (Organization of the Petroleum Exporting Countries)
It was founded in September 1960 during the Baghdad Conference.
- The founders: Five developing nations: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela
- Motivation: At the time, the global oil market was dominated by a group of multinational companies known as the “Seven Sisters.” These companies unilaterally cut oil prices in 1959 and 1960, severely hurting the revenues of these oil-producing nations.
- Goal: The founders want to assert control over the policies around petroleum production and ensure stable oil prices for their products.
- Power & Influence: Power comes from being the manager of the global oil supply and the capacity to influence oil prices.
- Market share: Collectively, OPEC nations have approximately 80% of the world’s proven crude oil reserves. If we exclude the UAE, it is approximately 75%. OPEC accounts for approximately 35–40% of global oil production.
The OPEC+ Alliance
In 2016, OPEC joined forces with non-member producers (mainly Russia) to form OPEC+. This expanded group controls around 50% of the global Supply, significantly increasing their ability to move prices by influencing production.
OPEC+ is currently a group of 23 countries ( will be 22 after the UAE’s exit on May 01, 2026). It contains 12 OPEC countries largely around the Middle East, led by Saudi Arabia, and 11 non-OPEC countries like Russia, Brazil, and Kazakhstan. As per the latest OPEC+ report, below are the top eight countries from the group with their production quota for May.
OPEC+ – May 2026 Production Targets for Major Countries
Interested in know top producer of petroleum, please read our article on Top 10 Oil Producing Nations 2025.
Reason for the UAE Quitting OPEC and OPEC+
The UAE’s decision to quit OPEC and OPEC+ is the result of a long-simmering rivalry with Saudi Arabia that finally boiled over due to the current Iran War.
The Core Conflict: Different National Interests: While both are Gulf superpowers and want to sell oil, their economic survival strategies have moved in opposite directions. The UAE wants to maximize by selling more oil, and Saudi Arabia wants to keep prices high by limiting the oil supply.
- Production Capacity versus Quotas: The UAE has spent over $150 billion to reach a production capacity of 5 million barrels per day. Under the Saudi-led Opec, they were forced to keep nearly 2 million barrels of that capacity idle. The UAE views this as a “stranded asset” problem – they want to sell their oil now before the global green energy transition reduces its value. Conversely, Saudi Arabia prioritizes higher prices and limited production to fund its “Vision 2030” program.
- Economic diversification: The UAE has successfully diversified its economy (oil now accounts for only 20% of its GDP). Saudi Arabia still has a large share of GDP coming from oil and has to wait for its “Vision 2030” program to achieve diversification.
- Profitability Matrix: According to estimates, the fiscal break-even cost for the UAE is comparatively low, at around $50–$60. For Saudi Arabia, this cost is approximately 90$. To put this in the current market context, where the price is $110 per barrel, the UAE was losing around $40 billion per year due to its inability to produce at its existing capacity.
- Market share: The UAE wants to secure long-term contracts with major Asian buyers (China, India, and Japan) by offering a reliable, high-volume supply. Saudi Arabia’s strategy of cutting supply to raise prices risks pushing buyers to other suppliers, such as the USA or Russia.
Catalyst Moment:
The Iran war and the blockade of the state of Hormuz acted as catalysts for the UAE’s exit. Faced with soaring costs and shipping disruptions, the UAE prioritized strategic agility over Saudi-led production quotas. By leaving OPEC, they can now maximize exports and revenue independently to fund national defense and economic recovery rather than remaining idle during the period of extreme regional and financial volatility. Oil prices after UAE OPEC exit in short terms seems to remain high.
Conclusion – UAE Exit From OPEC Impact
The UAE’s exit, fueled by Saudi rivalry, creates a dual economic shock. Initially, war-related blockades will keep prices high and drive global inflation. However, the UAE’s move signals the collapse of the OPEC cartel’s price-fixing power. Once the shipping lanes stabilize, the UAE’s volume-first strategy will likely spark a price war, flooding the market and potentially crashing oil towards the $80 mark.
Frequently Asked Questions
Why did the UAE leave OPEC in 2026?
The UAE reached a “ceiling” where its production capacity (4.85M bpd) exceeded its OPEC quota (3.2M bpd). Leaving allows them to monetize ~ $40 billion dollar at current oil rate of 110$ per barrel .
How does this impact global oil prices?
While regional conflicts keep prices high currently (~$110), in the long-term it is expected to introduce downward pressure on Brent crude by 2027.
What percentage of reserves does OPEC now hold?
With the UAE’s exit, OPEC’s share of global proven crude reserves drops from approximately 80% to roughly 75%.
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