The big development in oil markets yesterday was news that the UAE is set to leave OPEC from 1 May. This is a significant move and will be a big blow to OPEC. It’s the highest-profile exit from OPEC in recent years. Prior to the Iran war, the UAE was pumping 3.4m b/d of crude oil (February 2026), making up around 12% of total OPEC output and the third-largest producer within the group. The UAE’s departure will reduce OPEC’s effectiveness in managing and influencing the global oil market through supply measures.
The UAE’s exit will increase output, with current production capacity of around 4.85m b/d and plans to reach 5m b/d by 2027. However, before this can be tapped, there must be a resolution in the Persian Gulf that allows for uninhibited energy flows through the Strait of Hormuz once again. Therefore, in the short term, this development has little impact on the market. But in the medium to longer term, it means more supply for the market. This suggests that the Brent forward curve should move into deeper backwardation.
The UAE has been increasingly frustrated over recent years by its output being constrained by OPEC production quotas, which have kept it well below its potential. In 2024, UAE crude oil production averaged 2.95m b/d- well below capacity.
The timing of the exit was planned well; announcing a departure during a period of significant supply disruption limits the market impact. Had this been announced any other time, we would likely have seen more downward pressure on oil prices.
This would certainly be welcomed by President Trump, as it erodes OPEC’s influence in the oil market, while it should also be beneficial for importers and consumers. The other factor to monitor is whether the UAE’s exit will lead to further fracturing amongst the remaining OPEC members.
However, in the near term, the biggest driver for oil prices remains developments in the Persian Gulf and the timing of a resumption in oil flows through the Strait of Hormuz. With no signs of an imminent restart in oil flows we have revised higher our oil forecasts for the remainder of the year. We now expect ICE Brent to average $104/bbl in 2Q26 and $92/bbl in 4Q26.