PETALING JAYA: The United Arab Emirates (UAE) decision to quit the Organisation of the Petroleum Exporting Countries (Opec) and the wider Organisation of the Petroleum Exporting Countries and its allies (Opec+) grouping effective May 1 is not expected to have an impact on crude oil prices with total global supply constrained by the sustained closure of the Strait of Hormuz.
This was reflected in the price of the Brent oil futures contract that was up US$3 at US$107 a barrel at last watch.
Commodity analysts expect near term volatility in energy prices with any dip in prices likely to get bought due to the choke in place at the Strait of Hormuz.
In the medium term (six to 24 months), more UAE barrels could return once flows normalise.
The move comes after the UAE became increasingly frustrated over production quotas.
A rapid growth in its production capacity versus a relatively low Opec+ quota has since widened this gap, driving persistent UAE overproduction and ongoing frustration. The exit has implications on energy market pricing.
“The loss of a core Gulf member weakens Opec’s credibility. If the remaining group is unable to compensate for UAE volumes through collective discipline, price management could become harder to enforce at times of demand softness or non-Opec supply growth,” noted a HSBC Global Investment Research report.
Once the Strait of Hormuz reopens and output is restored, the report added the UAE could potentially raise its production to 4.5 million barrels a day or more, implying a volume increase of over one million barrels a day versus its most recent pre-war levels.
“We would expect this to be phased over 12 to 18 months, not immediate, in line with the Abu Dhabi National Oil Company’s stated intention to increase production gradually subject to demand and market conditions,” HSBC Global Investment Research stated.
The UAE’s move to quit the Opec cartel after nearly 60 years of membership comes after a “comprehensive review” of the country’s production policy and its current and future capacity, according to its Energy and Infrastructure Ministry.
Industry analysts believe the real reason behind leaving the oil cartel is future capacity.
The UAE wants to monetise its five million barrels a day target (by 2027) without Opec ceilings which limits its current output to 3.447 million barrels.
Due to the blockade, the UAE’s total production in March was only 1.892 million per day, already 1.56 million barrels below quota.
“Staying inside Opec risks future quotas capping output below technical capacity once flows normalise.
“They’re not solving a 2026 problem, they are removing a 2028 ceiling,” an analyst with a local brokerage added.
She added geopolitically, the Iran war disruptions exposed the limits of Opec’s coordination, making reliance on a Saudi-led framework less compelling when security alignment is uncertain.
Opec members accounted for about 36% of global crude oil production in early 2026 and about 44% to 45% in association with Opec+.
The UAE’s production quota accounts for about 9% of Opec quota. The UAE is estimated to have about 100 billion barrels of oil reserves and around 250 trillion cubic feet of proven natural gas reserves.
With its exit, the wider Opec+ alliance now includes a total of 21 countries, with 11 Opec countries and 10 other countries comprising non-Opec members like Russia.
Malaysia often aligns with Opec+ decisions informally but it is not bound by quotas.
The UAE and Malaysia’s hydrocarbon sector ties are anchored in the 2025 Comprehensive Economic Partnership Agreement, which opened the door for UAE sovereign wealth funds (Abu Dhabi Investment Authority and Mubadala) and Masdar (Abu Dhabi Future Energy Company) to invest in Malaysia’s energy, infrastructure, and industrial modernisation.
