The UAE’s decision to leave the Organisation of Petroleum Exporting Countries, while initially shocking markets, had in fact been signalled by years of growing tension between the Emirates and other members of the organisation. The withdrawal reflects structural changes in the oil market, increasing competition for market share, and diverging political and commercial interests within OPEC itself. It is also possible that Venezuela might follow the UAE out of the organisation.
OPEC, founded in 1960 by Saudi Arabia, Iran, Iraq, Kuwait and Venezuela, expanded over the decades through the addition of countries such as Algeria, Angola, Ecuador, Gabon, Indonesia, Libya, Nigeria, and Qatar, some of whom subsequently departed. The creation of OPEC+ in 2016, incorporating major non-OPEC producers such as Russia, strengthened the organisation’s influence over global oil supply. Yet despite this broader alliance, the UAE’s exit represents a significant weakening of OPEC because the Emirates had long been one of its most important and moderate members.
The UAE’s dissatisfaction with OPEC production quotas had been developing for many years. While working at the International Energy Agency in 2019, I observed that UAE oil production appeared significantly higher than its official quota. Historically, the UAE had usually complied with OPEC restrictions, so this marked a notable change. UAE authorities disputed the IEA’s findings, but the agency maintained that its figures were accurate. This episode revealed not only the UAE’s willingness to exceed agreed limits, but also the extent of its rapidly growing production capability.
The UAE’s growing output stemmed from extensive investment by Abu Dhabi National Oil Company (Adnoc). The company expanded its operations along the oil and gas value chain and developed a substantial trading business. By the mid-2020s, the UAE’s production capacity reached around 4.3 million barrels per day, with plans to raise this to 5 million barrels per day by the end of the decade. Such ambitions conflicted directly with OPEC’s system of production restraint. Although rumours of a possible UAE withdrawal circulated as early as 2019, most analysts believed the country would remain inside the organisation.
Tensions with Saudi Arabia intensified as the UAE’s ambitions grew. At a 2021 OPEC+ meeting, disagreements between the two countries became so severe that the meeting had to be adjourned temporarily. In 2024, OPEC attempted to accommodate the UAE by granting it a quota increase of 300,000 barrels per day, recognising both its spare production capacity and its importance to the group.
Political differences also contributed to the split. Saudi Arabia and the UAE had diverged over regional issues such as conflicts in Sudan and Yemen. Meanwhile, both states were competing to become dominant regional financial and commercial hubs. The UAE’s cooperation with Israel during retaliatory actions against Iran added further strain. A proposed currency swap arrangement between the UAE and the United States, suggested that closer ties with Washington might have encouraged the UAE to distance itself from OPEC.
There is a strong parallel between Adnoc’s expansion and the behaviour of Venezuela’s state oil company, PDVSA, during the 1990s. Then, PDVSA expanded production well beyond Venezuela’s OPEC quota and moved to transform itself into a commercially driven international oil company. Venezuelan output approached 3.5 million barrels per day, with plans to raise capacity to 5.6 million barrels per day. PDVSA management viewed OPEC restrictions as an obstacle to market share expansion, particularly in the United States. Had commercial considerations alone prevailed, Venezuela might have left OPEC during that period. However, Hugo Chavez’s election in 1998 ended those ambitions.
In the short term, the UAE’s departure has little practical effect on oil markets because the Middle East war has severely disrupted regional operations.
The longer-term implications, however, could be profound. Freed from OPEC quotas, the UAE is likely to pursue market-share expansion using its growing production capacity. This could bring it into direct competition with Saudi Arabia and other OPEC+ producers. At the same time, supply growth from non-OPEC countries such as the United States, Canada, Brazil, Guyana, Norway, and Argentina will intensify competition. This competition will fight for a share of a growing oil market which will recover from the dislocation caused by the war.
As for Venezuela, following the removal of President Maduro and growing U.S. influence over the country’s oil sector, international investment will return. Given Venezuela’s enormous reserves and long experience of producing crude oil, there will be a gradual recovery and in the long-term production could rise substantially from its current level of around one million barrels per day. Venezuela is currently outside the OPEC production quota system and as production grows investors may resist any future limits to production. It is entirely possible that Venezuela, encouraged by the United States, will leave OPEC.
The UAE’s departure constitutes one of the greatest setbacks in OPEC’s history. It weakens the organisation’s ability to regulate oil markets and increases the likelihood of a major struggle for market share among both OPEC and non-OPEC producers. Although continuing oil demand growth may support production expansion, heightened geopolitical instability and intensified competition are likely to cause prolonged volatility in global energy markets.
Neil Atkinson is a Senior Fellow with the National Center for Energy Analytics and author of, “After UAE Departure, What’s Next for OPEC?”
