Analysis-UAE exit weakens OPEC+ power over oil market but group to stay together, sources say

By Dmitry Zhdannikov, Alex Lawler and Ahmad Ghaddar

LONDON, April 28 (Reuters) - OPEC and its allies will lose some of their power over the oil market when the United Arab Emirates leaves the group on May 1, but the rest of the producer alliance is likely to stick together and continue to coordinate on oil supply policy, OPEC+ delegates and analysts said on Tuesday.

The UAE is the fourth-largest producer in the Organization of the Petroleum Exporting Countries and said it would quit the group on Tuesday after nearly 60 years as a member. That will free Abu Dhabi from the oil production targets imposed by OPEC and its allies to balance supply and demand.

The UAE's exit came as a shock, said five OPEC+ sources, who asked not to be named as they are not allowed to speak to the press.

The exit would complicate OPEC+'s efforts to balance the market through adjustments to supply because the group would have control over less of global production, four of the five sources said.

The UAE will become the largest oil producer to depart OPEC, a heavy blow to the organization and its de facto leader Saudi Arabia. Abu Dhabi pumped around 3.4 million barrels per day (bpd) or about 3% of the world's crude supply before the U.S.-Israeli war on Iran forced it and other Middle East Gulf producers to curb shipments and shut down some production.

OPEC and the Saudi government communication office did not immediately reply to a request for comment.

Once outside OPEC, the UAE will join the ranks of independent oil producers that pump at will, such as the United States and Brazil. For now, there is not much the UAE can do to increase production or exports due to the effective closure of shipping through the Strait of Hormuz. If and when shipping recovers to pre-war levels, the UAE could increase output to the country's capacity of 5 million bpd of crude oil and liquids.

There has been tension between the UAE and Saudi Arabia over the Emiratis' production quota, which stands at 3.5 million bpd. The UAE has asked for a bigger quota to reflect the fact that it had expanded capacity as part of a $150 billion investment program.

"For years, Abu Dhabi has been looking to monetize its investment in expanding capacity," said Helima Croft from RBC Capital Markets. The U.S.-Israeli war on Iran would, however, slow those plans down after drones and rockets damaged the UAE's production facilities, she said.

The war has resulted in the biggest-ever global energy supply disruption in terms of outright daily oil production, according to the International Energy Agency. The conflict has also exposed discord among Gulf nations, including between the UAE and Saudi Arabia.

Rumours of the UAE's exit from OPEC+ have circulated for years amid worsening relations with Riyadh over conflicts in Sudan, Somalia and Yemen. The UAE has also grown increasingly close to the United States and Israel.

IRAQ STAYS IN

The UAE is the fourth producer to quit OPEC+ in recent years, and by far the biggest. Angola quit the bloc in 2024, citing disagreements over production levels. Ecuador quit OPEC in 2020 and Qatar in 2019.

Iraq, the third-largest producer in OPEC+ after Saudi Arabia and Russia, has no plan to leave OPEC+ as it wants stable and acceptable oil prices, two Iraqi oil officials said on Tuesday.

OPEC+ will not collapse as Saudi Arabia will still want to manage the market with the help of the group, said Gary Ross, a veteran OPEC watcher and CEO of Black Gold Investors.

"At the end of the day, Saudi Arabia was essentially OPEC - the only country with spare capacity," said Ross. Saudi Arabia can produce 12.5 million bpd, but has in recent years kept production under 10 million.

OPEC+ membership gives countries more diplomatic and international weight - one of the reasons cited by analysts behind Iran's decision to stay in OPEC even at the peak of its fight with Gulf countries.

U.S. President Donald Trump has accused OPEC of "ripping off the rest of the world" by inflating oil prices. Trump has said the U.S. may reconsider military support to the Gulf because of OPEC oil policies.

It was, however, Trump who helped convince OPEC+ to cut output in 2020 during the COVID pandemic as oil prices slumped and U.S. producers suffered.

"The UAE withdrawal marks a significant shift for OPEC ... the longer-term implication is a structurally weaker OPEC," said Jorge Leon, a former OPEC official who now works at Rystad Energy.

OPEC+ members will be more focused on rebuilding facilities hit by the war rather than on embarking on production cuts in the near future, said Croft. Hence, the broader OPEC+ breakup is not on the cards for now, she added.

DECLINING POWER

OPEC’s sway over the market has been declining for decades.

Formed in 1960, OPEC once controlled over 50% of global output. As rivals' production grew, the group's share has declined to around 30% of the world's total oil and oil liquids output of 105 million barrels per day last year.

The United States, which used to rely on imports from OPEC members, has become its biggest rival over the past 15 years. The U.S. has raised production to as much as 20% of the world's total on the back of its shale oil boom.

The U.S. production spike prompted OPEC to team up in 2016 with several non-OPEC producers to form OPEC+, a group led by Russia - previously one of Saudi Arabia's top rivals in the oil industry.

The alliance gave the group control over around 50% of the world's total oil production in 2025, according to the International Energy Agency. The loss of the UAE means it will decline to around 45%.

(Reporting by Dmitry Zhdannikov, Alex Lawler and Ahmad Ghaddar; Additional reporting by Seher Dareen; Writing by Dmitry Zhdannikov; Editing by Simon Webb and Daniel Wallis)