Global oil markets were thrown into fresh turmoil this week after the United Arab Emirates formally announced its withdrawal from OPEC and the broader OPEC+ alliance, ending decades of membership and adding new uncertainty to an already fragile energy landscape.

The UAE’s departure, which takes effect on Friday, comes at a time when oil markets are already under intense strain from the ongoing conflict involving Iran and the continued blockade of the Strait of Hormuz, one of the world’s most critical energy chokepoints.

Initial market reaction was swift. Oil prices fell between 2% and 3% as traders anticipated that the UAE, freed from OPEC production quotas, could boost output and add more crude to global supplies. The prospect of increased production from one of the world’s largest exporters briefly eased fears of tight supply.

However, those losses were quickly reversed as geopolitical concerns returned to the forefront. By Wednesday, US benchmark West Texas Intermediate crude had climbed above $105 a barrel, while Brent crude rose past $112, both roughly 4% above their post-announcement lows.

The UAE’s decision follows years of friction with Saudi Arabia and other OPEC members over production limits. Abu Dhabi has invested heavily in expanding its oil capacity through the Abu Dhabi National Oil Company, aiming to raise output to five million barrels per day. Under OPEC quotas, much of that new capacity remained unused.

Analysts say the move reflects Abu Dhabi’s determination to prioritise national interests over collective production discipline.

The exit also represents a major challenge for OPEC, removing its third-largest producer and raising questions about the group’s long-term cohesion. Without the UAE, OPEC’s ability to coordinate supply and influence prices may become more complicated, especially during periods of geopolitical instability.

Compounding the uncertainty is the ongoing closure of the Strait of Hormuz. The waterway, which handles a substantial share of global oil and liquefied natural gas shipments, remains blocked amid tensions between Iran and the United States.

Iran has proposed reopening the strait as part of a broader agreement that would require the lifting of the US naval blockade and an end to hostilities. President Donald Trump has described Tehran’s latest offer as improved but has not accepted the terms, insisting on a broader settlement over Iran’s nuclear programme before sanctions are eased.

Energy analysts warn that the prolonged disruption in the Gulf has already removed a significant portion of global oil supply from the market, creating one of the most serious energy shocks in decades.

Despite the uncertainty, major international oil companies have benefited from higher crude prices. Firms such as BP, Shell, Chevron and ExxonMobil are expected to see stronger cash flows as elevated prices boost revenues.

For now, traders are balancing the possibility of increased UAE production against the far greater risk posed by continued instability in the Middle East.

The United Arab Emirates is set to leave the Organization of the Petroleum Exporting Countries on May 1, a move that underscores Abu Dhabi’s growing desire for greater control over its energy policy and raises fresh questions about the future of oil market cooperation in the Gulf.

The decision follows years of frustration over OPEC production quotas, which have limited the UAE’s output despite billions of dollars invested in expanding its oil production capacity. Abu Dhabi has steadily increased its ability to pump more crude, but OPEC restrictions have prevented it from fully capitalising on those investments.

Energy analysts say the move reflects a clear strategic calculation.

“The UAE made a long-term decision years ago to expand its oil and gas production,” said Bill Farren-Price of the Oxford Institute for Energy Studies. “Having invested heavily in new capacity, it now sees little benefit in continuing to restrain output.”

The departure highlights broader tensions within OPEC and the wider OPEC+ alliance, where efforts to manage global supply have increasingly conflicted with the ambitions of members eager to boost market share. The UAE, in particular, has sought a larger production quota to better reflect its expanded capacity.

Frédéric Schneider, a senior fellow at the Middle East Council on Global Affairs, said the country’s primary motivation is straightforward: increasing exports.

“The most obvious driver is that the UAE wants to sell more oil,” he said, noting the significant gap between the country’s production potential and its current OPEC allocation.

Beyond oil production, the decision also signals a wider shift in the UAE’s regional posture. Analysts say Abu Dhabi is becoming more willing to pursue an independent course, even when that means stepping back from established regional institutions.

“It shows the UAE is increasingly prepared to chart its own path,” Farren-Price said. “That includes relying less on groupings such as OPEC and, to some extent, the Gulf Cooperation Council.”

The move echoes Qatar’s departure from OPEC in 2019 and reflects a broader trend among Gulf states toward prioritising national economic interests over collective energy strategies.

While the UAE’s exit is unlikely to trigger an immediate rupture within the Gulf Cooperation Council, it does highlight underlying differences among member states. Regional analysts expect Gulf governments to respond cautiously, focusing on maintaining stability and preserving broader political and economic ties.

For OPEC, the departure represents another challenge as the group seeks to maintain unity and influence in an increasingly competitive global energy market. The UAE has long been one of its most significant producers, and its exit may prompt questions about how effectively the organisation can balance collective discipline with the individual ambitions of its members.

As global energy markets continue to evolve, the UAE’s decision marks a significant moment, both for OPEC and for the future of Gulf energy cooperation.