New Delhi: The United Arab Emirates’ (UAE) decision to leave the Organisation of the Petroleum Exporting Countries (OPEC) marks a break from the cartel’s long-standing supply framework and could weaken its ability to influence global oil prices, according to an analysis by ICICI Direct. “The UAE’s announcement of its formal exit from OPEC… breaks a 65-year-old system of the OPEC cartel,” the report said, adding that the group’s influence has historically rested on a simple principle — “control supply, and you control price.”
Follow Energy Watch on X
The brokerage highlighted that OPEC’s relative influence has already been diluted by rising output from non-OPEC producers. “The key number to remember: OPEC+'s share of global production has fallen from 53 percent in 2016 to 46 percent today. US shale, Canadian oil sands, Brazilian deepwater, and Guyanese pre-salt fields have been steadily gaining ground for a decade. The UAE's exit adds further pressure to that trend,” said ICICI Direct.
Its data showed the United States (US) leading global production at 13.626 million barrels per day (bpd), followed by Russia at 9.977 million bpd and Saudi Arabia at 7.763 million bpd. Canada produces 5.23 million bpd, China 4.19 million bpd and Brazil 4.015 million bpd.
Among OPEC producers, the UAE produces 1.908 million bpd, close to Iraq’s 1.906 million bpd. The report noted that the US alone produces almost as much oil as Saudi Arabia and Russia combined, underscoring the shift in market power.
ICICI Direct said the UAE’s exit is linked to its expanding production capacity and constraints under OPEC quotas. The country has invested significantly to raise capacity to 4.85 million bpd and aims to scale it further to 5 million bpd by 2027. The report said quota limits had increasingly constrained the UAE’s ability to monetise this capacity, while broader geopolitical tensions in the Gulf also contributed to the decision.
Interestingly, the UAE UAE is not the first to quit, but it is by far the most consequential departure in OPEC’s history. Earlier, Angola left the bloc in 2024, as did Ecuador in 2020, Qatar in 2019 and Gabon in 1995 (before rejoining in 2016). Indonesia was suspended from OPEC in 2009, rejoined in 2016 before being suspended again in the same year.
On price outlook, ICICI Direct expects crude to remain supported in the near term due to supply disruptions and geopolitical risks, particularly around the Strait of Hormuz. For the near-term, ICICI Direct has maintained a “bullish” outlook. It said, “The Hormuz closure is a live supply shock, tightening the immediate availability of oil. In response, the IEA has released 400 mb of emergency reserves, which is the largest coordinated stock draw since the 2011 Libya crisis. At the same time, Goldman Sachs raised its Q4 Brent forecast to USD 90, which now appears conservative with prices already above USD 110. In this environment, geopolitical uncertainty continues to command a real and sticky premium.”
However, the report warned that the medium-term outlook could turn softer. “Looking ahead, when Hormuz reopens, the UAE is expected to ramp up output aggressively, targeting 5 mb/d without quota constraints. Alongside this, output from the Americas is rising, while the possibility of Russian sanctions relief adds further supply potential. Taken together, these factors build a significant risk of oversupply. In this scenario, Saudi Arabia’s ability to manage OPEC cuts on its own becomes materially weaker.”
This, it noted, could leave Saudi Arabia with a “weaker hand” in managing production cuts. As a result, price movements are likely to become more pronounced, with larger swings in both directions going forward, it said.
The analysis flagged a broader risk to OPEC’s internal cohesion if other producers follow a similar path. “One exit is a crisis; two is a dissolution,” the report said, pointing to the possibility of further strain within the group if quota-related tensions persist.
Follow Energy Watch on LinkedIN
Despite the structural implications, ICICI Direct said the immediate impact on physical supply remains limited. With the Strait of Hormuz effectively constrained, the UAE’s ability to increase exports is restricted in the near term, meaning the market impact will depend on how quickly logistical bottlenecks ease. “The UAE’s exit may prove significant, but its impact will depend on how supply, demand, and geopolitics evolve from here. The Hormuz situation remains uncertain, and any resolution could change the supply outlook, but not necessarily in a uniform or lasting way,” it said.