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The writer is an oil market analyst and founder of Base Research
Every cartel eventually ends in failure. As members struggle to respond to the rise in new sources of supply outside the cartel, fissures are opened up by changes in individual country circumstances and distribution of production among members.
Opec is likely to prove no different. The United Arab Emirates’ decision to leave both Opec and the broader group of producers known as Opec+ is the biggest challenge to the cartel for decades and will profoundly alter attempts to manage the oil market.
The decision represents a rejection of the production-control system dominated in recent years by Saudi Arabia. It will be even more damaging to the cartel if other major producers decide to leave or are emboldened to ignore output agreements to pursue their own interests.
In 2025, the UAE was the fifth-largest crude producer in Opec+, producing almost 3.4mn barrels per day of crude oil, trailing Saudi Arabia (9.3mn b/d), Russia (9.1mn b/d), Iraq (4.3mn b/d) and Iran (3.4mn b/d), according to the US Energy Information Administration.
In practice, the UAE was the fourth-largest producer participating in the group’s controls, because Iran, along with Venezuela and Libya, was exempted from quotas. The UAE accounted for a relatively small share of the global crude market (4 per cent) but a much higher share of Opec output (12 per cent) especially among those countries subject to controls (15 per cent).
Even that understates the UAE’s significance because the country has been one of the few members able to increase output and one of the few holding spare capacity to support prices. Most Opec+ members have been producing as much crude as they are technically able despite the formal limits laid down in production agreements.
Cartels typically boost prices above the level that would prevail in their absence, but that encourages faster growth of supplies from sources outside group members and threatens to undermine their market mastery.
Opec+’s share of output has fallen for a decade as high prices have encouraged the fast growth of supply from countries outside the cartel, especially from the US, Canada, Brazil, Guyana and Argentina.
Quotas for the cartel have become increasingly detached from reality as some members have maintained or increased production while others have struggled because of war, sanctions, corruption and mismanagement. Opec+ members have been divided about how or even whether to update quotas to take account of the shifting balance of production and capacity, stymying efforts to modernise the agreements.
Saudi Arabia has become increasingly dominant within Opec and because it is the largest producer and one of the few willing and able to adjust output significantly in response to market conditions. For more than a decade, production decisions have increasingly been driven by the kingdom — with other members invited to agree or face the threat of uncontrolled output and a price war.
The kingdom’s cartel leadership has made it a lightning rod for criticism from other members unhappy about decisions on current production and future allocations. For years, the UAE has pressed for a higher allocation to reflect its significant investment in new production capacity and ambitions to grow its output. Now after leaving Opec, it will be free to make its own production decisions.
Other countries have left the cartel, including Angola, Ecuador and Qatar. In the case of the UAE, there has been inevitable frustration for a financially strong and fast-growing producer that feels constrained by an organisation focused on limiting output to support prices.
But the timing of the decision, in the middle of a war and the worst supply disruption for decades, reflects a broader estrangement between the UAE and Saudi Arabia. The UAE and Saudi Arabia have always been rivals as well as allies in their ambition to play a leading role within the Gulf and across the wider Middle East and north Africa.
Saudi Arabia’s modernisation programme and pressure on international business to locate their regional headquarters to the kingdom have brought it into direct conflict with the traditional financial centres in Dubai and Abu Dhabi. Simmering tensions between the two countries seem to have come to a head over their different strategies for dealing with Iran following the eruption of war with the US.
As a result, top policymakers in the UAE are no longer prepared to play little brother to Saudi Arabia’s big brother in Opec and have decided to set production policy for themselves. Freed from Opec restraints, the UAE will probably increase production faster than otherwise, intensifying downward pressure on oil prices in the medium term.
