The United Arab Emirates’ recent announcement regarding its exit from OPEC and the broader OPEC+ alliance has shaken the global energy market. The unexpected move, coming at a time of heightened geopolitical tensions and already volatile oil prices, has injected new uncertainty across the world.
Created in 1960 by countries including Saudi Arabia, Iran, Iraq, Kuwait and Venezuela, the Organization of the Petroleum Exporting Countries (OPEC) was designed to coordinate the oil policies of major oil-producing countries and stabilize global prices through production quotas.
Over the decades, it has become one of the world’s most powerful economic alliances, controlling around 40% of the world’s oil supply and more than 80% of proven reserves. The subsequent inclusion of Russia and other global players within OPEC+ has further strengthened its influence, making it the central force shaping global energy policy.
Although the UAE currently has a production capacity of around 4.8 million barrels per day (bpd), and plans to expand this to 5.0 million bpd by 2027, it was constrained by OPEC production quotas. For a country which has invested massively in the development of its oil infrastructure, these limits appear more and more as a constraint rather than an advantage.
By leaving OPEC, the UAE now seeks to export oil independently, maximize production and achieve greater foreign exchange earnings without being bound by collective decisions. If the UAE significantly increases its oil production in the coming years, global supply could increase, which could stabilize or even lower prices. The UAE’s new independence could also allow it to enter into new bilateral agreements with countries on more flexible terms, including favorable tariffs or deferred payment terms.
Apparently, this decision was also influenced by the ongoing conflict in Iran, which has severely disrupted global oil supply chains, particularly across the strategically critical Strait of Hormuz. This narrow waterway accommodates nearly a fifth of global oil shipments, making it one of the world’s most sensitive energy corridors. The recent conflict has not only restricted oil flows, but also exposed the vulnerability of Gulf economies that depend on this route.
In response, the UAE is actively seeking alternative export strategies. The Fujairah port and the Abu Dhabi-Fujairah pipeline aim to bypass the Strait of Hormuz, providing some strategic independence. However, these alternatives cannot completely replace Hormuz, meaning that the UAE and the Gulf market remain exposed to regional instability.
In my opinion, another important dimension of this evolving scenario is the changing regional alliances within the Gulf. Traditionally, the United Arab Emirates has maintained close ties with Saudi Arabia, the de facto leader of OPEC. However, recent years have witnessed a distance between the two countries.
At the same time, relations between the United Arab Emirates and Qatar have improved after years of tension. The two countries share a common interest: ensuring secure maritime trade routes and reducing their dependence on the Strait of Hormuz. Qatar’s geographic location and reliance on maritime exports make it a natural partner for the UAE in exploring alternative energy corridors and cooperative security frameworks in the Gulf.
In my opinion, energy, especially oil, remains the backbone of the global economy in the 21st century. Even minor fluctuations in oil prices impact financial systems, trade flows, industrial production and the daily lives of ordinary people. The departure of the United Arab Emirates from OPEC is therefore not only an economic decision. This reflects a broader shift toward national energy sovereignty, regional realignments, and a more fragmented global oil governance system.
The departure of the United Arab Emirates from OPEC is a signal of transformation in the global energy order. While it offers the Emirates greater economic freedom, it also introduces new uncertainties into an already fragile market. In the long term, this could weaken OPEC’s ability to control oil prices and encourage other member states to say goodbye.
For the world, and particularly for energy-dependent economies like Pakistan, this development brings both risks and opportunities. The message is very clear: adapt quickly, otherwise you risk finding yourself vulnerable in an increasingly unpredictable energy future.
The writer is a member of the National Assembly and patron-in-chief of the Hindu Council of Pakistan. He tweets/posts @RVankwani
Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the editorial policies of PK Press Club.tv.
Originally published in The News
