Markets
April 28, 2026
Central Banks Hold $4T in Gold vs $3.9T in US Treasuries First Time Since 1996
UAE leaving OPEC marks the end of a six-decade alliance that helped shape global oil markets. The United Arab Emirates announced on Tuesday it will exit the Organization of the Petroleum Exporting Countries effective May 1, 2026, abandoning production quotas that capped output at just 3.4 million barrels per day. The country now aims to ramp up production to 5 million barrels daily by 2027, leveraging spare capacity and infrastructure that bypasses the war-choked Strait of Hormuz entirely.
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Fujairah Pipeline Bypasses Hormuz as UAE Breaks Free From Saudi Production Limits
The timing couldn’t be more spot on. As Saudi Crown Prince Mohammed bin Salman hosted a Gulf summit on Tuesday, UAE officials also dropped the bombshell announcement from hundreds of miles away. The move represents a direct challenge to Saudi Arabia OPEC leadership and the cartel’s ability to manage oil prices through coordinated production cuts.
Energy Minister Suhail Al Mazrouei told CNBC the decision was made to limit disruption to fellow producers, adding that the UAE wants more freedom to make production decisions and reach its 5 million barrels per day capacity target by 2027. The country currently has production capacity of roughly 4.8 million barrels daily but has been constrained by OPEC+ quotas of just 3.3 million barrels per day.
Why Is UAE Leaving OPEC Now?
The departure wasn’t sudden. UAE frustrations had been building for years as Saudi ministers favored production curbs to support oil prices, right now sitting around $111 per barrel after spiking to $119.50 during the Iran conflict. Meanwhile, Iraq and Russia routinely exceeded their quotas, leaving the UAE and Saudis doing what analysts call the “heavy lifting” on price stability.
The Fujairah Pipeline changes everything. This independent export route also bypasses the Strait of Hormuz completely, allowing the UAE to add up to 2 million barrels per day even as Iran blocks a fifth of the world’s seaborne oil through the strait, while Saudi Arabia lacks this advantage.
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Impact on Oil Prices and OPEC’s Future
Jorge León from Rystad Energy stated:
“The UAE withdrawal marks a significant shift for Opec. Alongside Saudi Arabia, it is one of the few members with meaningful spare capacity — the mechanism through which the group exerts market influence.”
He added that why is UAE leaving OPEC creates a “structurally weaker OPEC” going forward. The cartel controls 80% of proven reserves but produces only 40% of global crude, and losing its third-largest producer undermines that collective power.
David Oxley from Capital Economics noted the announcement suggests global supplies will be higher once Hormuz reopens, fitting with the view that “the ties binding Opec members together have loosened.”
Geopolitical Tensions Behind the Split
Anwar Gargash, diplomatic adviser to the UAE president, also criticized Arab and Gulf states at Monday’s forum for insufficient protection from Iranian attacks. He said:
“Every Gulf state had its own policy of containment toward Iran, and all of those containment policies have failed.”
The statement from UAE’s energy ministry also framed leaving OPEC as giving greater flexibility to respond to a “new energy age” aligned with the country’s long-term vision. At the time of writing, the UAE has roughly 1.5 million barrels per day of spare capacity available immediately.
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The move also represents a win for Donald Trump, who previously accused OPEC of “ripping off the rest of the world” by inflating oil prices. Within weeks of the UAE threatening yuan adoption, the US has also offered a dollar swap line between the two countries’ central banks, and the Emirates promptly announced this historic break from the cartel.
