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The shock decision of the United Arab Emirates to leave OPEC reverberates throughout the world’s energy markets, exposing the collapse of the powerful oil company as a risk to production rates that prompts other members to do the same.
The country’s decision follows weeks of missile and airstrikes in Iran, and the blockade of the Strait of Hormuz has disrupted its exports, and put pressure on its economic backbone.
“The UAE exit is another chapter in the changing membership of the group,” said Andy Lipow, president of Lipow Oil Associates. “If countries that comply with their quota are disgusted by those that don’t, we could see other exits that could eventually render OPEC useless as a cartel,” he told CNBC in an email.
Countries, including Qatar, Ecuador and Angola have left the group in recent years, citing frustration with quotas or changing national priorities.. Angola left in 2024, and Qatar ended its membership in 2019.
The cartel has long struggled with uneven compliance, with some members historically exceeding their production quotas, including Iraq and Kazakhstan.
“When the UAE left OPEC, it was not the first and it may not be the last,” Lipow said.
Countries that are tired of seeing other OPEC and OPEC+ members cheating on their quotas are about to leave these groups.
Andy Lipow
Lipow Oil Associates
At the heart of the UAE’s decision there is a general tension: members who have invested heavily in improving production capacity are increasingly reluctant to restrict quotas designed to support prices.
The country drew about 2.37 million barrels per day in March, compared to its crude capacity of about 4.3 million bpd, according to the latest IEA data.
‘Flight accidents’
Analysts have identified several countries that could be “flight risk”, angered by the OPEC+ restrictions, which could consider giving up their membership.
Matt Smith, chief oil analyst at Kpler, flagged Kazakhstan as a key candidate, noting its persistent overproduction. “Kazakhstan had a lot of production last year, so they may see this as an opportunity for them to leave the group as well,” said Smith, adding that Nigeria could also be another to watch.
Nigeria, Africa’s largest crude oil producer, has been prioritizing domestic refining, particularly with the Dangote refinery, reducing its reliance on export markets and potentially weakening its incentive to remain dividend-bound.
Smith explained that the expansion of the Dangote refinery means it can process more oil domestically and capture higher fuel margins. That reduces its reliance on OPEC’s strategy of supporting crude prices through supply measures and instead increases its focus on increasing prices and lower returns.
“Nigeria is in a similar situation in terms of not wanting to be amputated: it is a serious risk to flying because it has become self-sufficient,” Smith noted. “By redirecting its crude domestic product to the Dangote refinery, Nigeria is not dependent on global market fluctuations.”
Venezuela is another non-contender, market watchers say. With the result recovering faster than expected and a potentially US-friendly political environment emerging, Caracas could seek greater flexibility.
“Venezuela may be out of power after a change in leadership when it reaches a friendly position with the US,” said Saul Kavonic, an energy analyst at MST Marquee.
Kpler’s Smith also said that Venezuela may be new because it has been integrating production and exports at a faster pace than expected. Venezuela’s oil exports rose by more than a million barrels a day in March for the first time since September.
OPEC+ is imposing core production quotas that are reported to reduce output by about 2 million barrels per day until the end of 2026.
Eight key OPEC+ producers including Saudi Arabia and Russia agreed on April 5 to begin a cautious reduction in their voluntary cuts, gradually returning about 206,000 barrels per day to the market in May from a broader cut of 1.65 million bpd first introduced in 2023, according to an official OPEC statement.
Isolated but important?
The UAE’s move comes as OPEC faces a split. Several members including Iran, Libya and Venezuela have been excluded from the measures due to sanctions or conflicts, complicating efforts to maintain unity.
Lipow noted that frustration with inequality may drive the exodus. “Countries are tired of seeing other members of OPEC and OPEC+ cheat every time in their estimates and want to leave these groups.”
A decrease in cohesion could lead to volatile oil markets. Bob McNally, president of Rapidan Energy Group, said any erosion of OPEC+ rules could increase price volatility. “The biggest impact will be the increase in oil price volatility,” he said.
Still, some argue that OPEC’s main function, stabilizing markets, remains the same, even with fewer members.
Claudio Galimberti, senior vice president at Rystad Energy, said the group’s track record, especially during times of crisis such as the Covid pandemic, suggests resilience.
“The group in the last 10 years has been able to measure the market in an amazing way,” he said. “If OPEC plus wasn’t there during Covid, we would have a lot of volatility in the market.”
