The decision by the United Arab Emirates to walk out of OPEC and the broader OPEC+ after nearly six decades is being read not merely as an energy policy shift, but as a direct consequence of the ongoing war in West Asia, more so the ongoing crisis of Strait of Hormuz, which has destabilised oil flows, fractured producer unity and accelerated a reordering of global energy alliances.
The announcement comes against the backdrop of a severe supply disruption triggered by conflict in the region, with the World Bank warning of the largest oil supply shock on record. Shipping through the critical Strait of Hormuz, through which nearly a fifth of the world’s oil passes, has been severely affected, pushing up energy prices and rattling global markets.
For decades, OPEC functioned as a cartel balancing supply to stabilise prices. But the current war, drawing in regional powers and disrupting trade routes, has exposed the limits of coordinated production cuts, creating further divide and in the long term more competition.
The UAE’s exit also reflects a growing divergence within the grouping. Abu Dhabi, which has invested billions to ramp up oil production capacity, increasingly found itself constrained by OPEC quotas at a time when supply shortages have driven prices higher.
Energy analysts in one of the BBC articles say the war has forced oil producers into a stark choice: defend price stability through coordinated restraint, or maximise output to capitalise on supply gaps. The UAE has chosen the latter, as most analysts feel that ongoing conflict conditions in West Asia can reward producers who can act quickly and independently.
The departure is widely seen as a structural blow to OPEC. The UAE accounts for a major share of spare production capacity and has historically been among the more compliant members of the cartel. Its exit leaves Saudi Arabia, OPEC’s de facto leader, with a heavier burden to stabilise markets. International media and the analysts warn that Riyadh will need to do a little more to enforce discipline among remaining members, especially amid widening geopolitical divides involving Iran and Russia.
Some experts have gone further, calling the move “the beginning of the end” for OPEC as a cohesive force. The risk is contagion: if other producers follow suit, the cartel’s ability to influence prices could erode rapidly, ushering in a more fragmented and volatile oil market.
Washington’s win
The shift also carries clear geopolitical hints. Donald Trump has repeatedly criticised OPEC for keeping oil prices artificially high and had pressed Gulf producers to increase output.
The UAE’s decision is finally going to benefit Washington and its long-standing demand for lower oil prices and more flexible production. It also opens the door for closer strategic alignment between Abu Dhabi and the United States at a time when global energy security has become deeply entangled with geopolitics.
Market implications: lower prices, higher volatility In the short term, the war-induced disruption, especially around the Strait of Hormuz, means the UAE’s exit may not immediately translate into increased supply. But over the longer term, the country is expected to significantly boost production, potentially adding up to one million barrels per day. This could exert downward pressure on prices.
Without a strong, unified OPEC, oil markets could swing more sharply in response to geopolitical shocks, supply disruptions or unilateral production decisions.
The UAE’s relatively low cost of oil production, far below many peers gives it an advantage in such an environment. It can afford to pump more even when prices fall, prioritising market share over price control.
India watches closely
For India, the world’s third-largest oil importer, the developments carry mixed implications. On one hand, increased production outside cartel constraints could help moderate prices over time, offering relief to inflation and the current account.
On the other, heightened volatility amid geopolitical tensions could complicate energy planning, disrupt supply chains and expose India to sudden price spikes, particularly if instability in the Strait of Hormuz persists.
New Delhi has already been diversifying its energy sources and building strategic reserves, but the evolving crisis highlights the vulnerability of import-dependent economies to distant conflicts that can perhaps bring a new energy order.
The UAE’s exit is symbolic of a broader transformation as described by one of the news analyst, the erosion of old alliances and the emergence of a more fluid, competitive energy landscape shaped by geopolitics as much as economics.
As current war redraws fault lines in West Asia, oil is once again at the centre of global power politics. And with OPEC’s cohesion under strain, the rules that governed energy markets for decades may be giving way to a more unpredictable era.
