The United Arab Emirates (UAE) has officially announced its withdrawal from OPEC as of May 1, 2026. This historic move follows long-standing disagreements over production targets and heightened regional tensions, according to a UBS report.

This announcement marks a significant development in oil diplomacy, but UBS analysts expect a limited impact on global prices in the short term. Physical export restrictions, particularly those related to the Strait of Hormuz, currently prevent a sudden surge in supply.

However, the analysts' report warns of "significant risks of lower oil prices in the medium term" as the UAE seeks to monetize its extensive investments in production capacity.

The UAE has current capacity of 4.5 million barrels per day (mbpd), which is significantly higher than its recent production of 3.6 mbpd. Work is already underway to expand capacity to 5 mbpd by 2027.

Having freed itself from OPEC+ quotas, the UAE can increase production as logistical obstacles are removed. With a 25% share of OPEC's total spare capacity, the UAE's exit is described as a "fundamental challenge to the group's market balancing mechanism."

Economic outlook and impact on GDP

Oil activities currently account for approximately 25% of the UAE's total GDP. While the exit presents opportunities for future growth, the short-term outlook is constrained by regional conflict.

After a 5.1% increase in oil GDP in 2025, analysts predict a slight decrease in 2026, with production reaching 3.65 million barrels per day. by the fourth quarter.

For 2027, oil GDP is projected to recover by 6%, as the UAE begins to utilize its new freedom of production. In a high-growth scenario, where the country aggressively pursues its goal of 5 million barrels per day, oil GDP could theoretically increase by more than 20%.

However, the report notes that the UAE is likely to take a "balanced and market-oriented approach" to avoid a complete collapse in prices.