The oil swan. How the UAE exit from OPEC will hit Russia

On May 1, the UAE withdrew from OPEC. The largest member of the cartel in his history left the alliance without warning partners. Behind this decision are two years of accumulated contradictions with Saudi Arabia – from the war in Yemen and Sudan to the personal rivalry of the two rulers – and simple arithmetic. By investing $150 billion in production capacity, Abu Dhabi was forced to keep them in jail for a quota that cost the country tens of billions of lost revenue annually. While the Strait of Hormuz is closed, the market will not feel it. But when it opens, an additional million barrels of Emirati oil per day will be a direct deduction from the Russian budget, which is already being implemented with a deficit three times higher than the annual plan, says George Voloshin, an international expert in the field of sanctions and CIS countries.

The United Arab Emirates (UAE) has left OPEC and OPEC+ from May 1. First about it on April 28 reported The state agency WAM. Then the Minister of Energy of the country Suhail al-Mazroui stated Reuters that the decision was made without prior consultation with partners on the cartel, and described it as a political one. Official statement by UAE authorities Formulated The essence of what happened is very succinctly: “It is time to focus our efforts on what our national interests demand.”

From OPEC to OPEC+: the history of two partnerships

Abu Dhabi joined OPEC in 1967, four years before the emirates gained statehood. Oil diplomacy preceded sovereignty. The main rate of the first participants was not the system of quotas, but sovereignty over the subsoil: OPEC gave small states of the Gulf a collective vote against “Seven Sisters” Western majors who controlled production and pricing. The UAE participated in the 1973 oil embargo, which raised the price of a barrel from $ 3 to $12 in a few months. In 1971, the national oil company Abu Dhabi ADNOC was established, and in 1974-1976 Western concessions were replaced by equity participation with the majority stake in the state.

The first 40 years of OPEC is a period of growth without restrictions. Production of only the UAE increased from 300 thousand barrels per day (b/d) in the first half of the 1970s to 2.5 million b/d by the beginning of the new millennium. Membership in the organization ensured price stability, international recognition and access to a serious platform for dialogue with consumers.

Established in 1976, the Abu Dhabi Investment Authority (ADAIA) is one of the world’s largest sovereign funds with assets in excess of $1 trillion and represent a direct result of patiently savings in oil revenues for decades.

The UAE’s relationship with Saudi Arabia has historically been built on a tight alliance. When the price of Brent collapsed below $9 per barrel due to overproduction in 1986, the coordination of Riyadh and Abu Dhabi allowed the cartel to develop a single answer. In the super cycle of the 2000’s, both states increased production simultaneously. In 2006-2008, the UAE produced about 2.9 million b/d.

UAE with Saudi Arabia has long been allies in OPEC and in the 2000’s increased production in synchrony

The turning point in the history of the oil cartel was the creation of OPEC+ in December 2016. After another collapse, Brent below $28 per barrel, OPEC for the first time concluded an agreement with Russia and nine other producers. The total production reduction amounted to 1.8 million b/d, the UAE quota was about 2.87 million b/d. For Abu Dhabi, this opened a pragmatic format of interaction with Moscow: both countries regularly coordinated positions within the framework of the Joint Ministerial Monitoring Committee (JMMC). It was the three “Saudi Arabia – Russia – the UAE” that formed the real core of the alliance, while the rest of the participants played a predominantly symbolic role.

The key test for OPEC+ was the April 2020 deal. When the talks broke down in March and Saudi Arabia began a price war against Russia, the UAE initially supported Riyadh, increasing the proposal. Oil fell below $20 per barrel, and in April, futures on the WTI for the first time in history went into the negative zone.

The price disaster forced recent partners to return to the negotiating table, and this time it was about reducing an unprecedented scale of almost 10 million bpd in the alliance. It was impossible to overcome the crisis without the consensus of all three key players. After that, OPEC+ actually assigned the role of a mandatory participant in any major oil deal for the UAE.

In 2021-2023, ADNOC invested more than $150 billion in production capacity. Production potential increased from 3.5 million to 4.85 million b/d with a quota stuck at the level of 3.2 million b/d. In June 2023, OPEC+ raised the base level of production for the UAE to 3.22 million bpd, recognizing the accumulated investments, but this concession only partially relieved tension. In February 2026, the UAE добывалиproduced 3.42 million b/d, or 12% of total OPEC production. The country, which invested gigantic funds in infrastructure, was forced to keep it in the forced downtime. It could not have been going on for a long time.

What is behind Abu Dhabi’s decision

The gap between the potential and the quota is not just an accounting problem. At prices above $100 per barrel, every million b/s of idleness generates lost revenue of more than $ 36 billion a year. For the country with a production cost below $10 and a budget break-even of about $50 per barrel, which is almost half the Saudi $90, this is a real tax on its own infrastructure.

ADNOC has spent the same $150 billion per full load by 2027. On the one hand, staying in the quota system meant to finance competitors at the expense of their own downtime. On the other hand, the International Energy Agency (IEA) predicts the peak of oil demand until 2030. For the UAE with their шестымиsixth-largest oil reserves in the world (113 billion barrels), this is a direct cause for concern. To continue to limit production with a rigid quota framework means “to leave money on a table”.

However, the purely economic motive does not explain either the choice of time or tone of the exit. Behind them is a negative political background that has been sibling for years. At first, Saudi Crown Prince Mohammed bin Salman and the de facto ruler (and 2022) of the UAE, Muhammad ibn Zayed, acted in tandem: joint military operations in Yemen, the blockade of Qatar and coordinated confrontation with Iran. Since 2019, their trajectories have begun to diverge. In December 2025, the UAE-backed Southern Transitional Council seized territories in Yemen, controlled by Riyadh-loyd-loyed groups. After Saudi Arabia launched airstrikes on an Emirati caravan with weapons, the UAE withdrew troops from the country.

The economy does not explain either the choice of time or tone of the exit - behind them is the negative political background accumulated for years

Sudan has opened a new front of contradictions. While Abu Dhabi had armed Rapid Reaction Forces, Riyadh supported the war on the regular army. Both countries are on opposite sides of the largest humanitarian crisis in the world. The normalization of the UAE’s relations with Israel under Abraham’s agreements – a step that Saudi Arabia has not yet decided on – Riyadh has taken as another evidence that Abu Dhabi is consistently emerging from its orbit of influence.

The Iranian crisis was only the catalyst for the gap that has already been emerging. Tehran’s missile and drone strikes on the emirate infrastructure unexpectedly questioned the UAE’s membership in OPEC and OPEC+, where Iran is just an equal party.

On April 27, Advisor to the President of the UAE, Anwar Gargash, publicly accused the Cooperation Council for the Arab States of the Persian Gulf (GCC, which, in addition to Saudi Arabia and the UAE, includes Bahrain, Qatar, Kuwait and Oman) in the “historically inadequate” response. Unlike the GCC partners, limited to the words of support, Israel provided the Emirates with air defense systems.

Finally, behind all the accumulated contradictions is a direct rivalry between the two OPEC leaders. Over time, the future Saudi king began to perceive Abu Dhabi as a threat of Saudi hegemony, and the head of the UAE, having ceased to be his mentor, turned into an antagonist. “Vision 2030” Mohammed bin Salman is a direct challenge to the Emirati model of development.

Riyadh has long been trying to lure the headquarters of multinational corporations from Dubai, creating competing tourism and aviation projects, and also claims to be a regional financial hub. The UAE is ahead of Saudi Arabia in economic development for about two decades and do not intend to lose ground. The exit from OPEC/OPEC+ is not only and not even so much about oil. This is a kind of statement of sovereignty.

End of manageable uncertainty: what is losing

While the Strait of Hormuz is closed, the UAE’s exit from both structures will have no significant consequences for the market. According to the IEA, oil production in the region fell by 10 million bpd by mid-March. Production in the UAE itself decreased almost half – from 3.47 million b/d in February to 1.89 million bpd at the end of March. Meanwhile, oil exports through the strait fell from 20 million bpd to just over 2 million bpd.

Alternative routes, namely Saudi East-West Pipeline to the port of Yangbu on the Red Sea and the Emirati pipeline to Fujairah, compensated only a small part of the fallen volumes. According to the forecast of Rystad Energy, even in an optimistic scenario for a return to 3.5 million b/s will take time before the end of the year. The paradox of the situation is that it is the crisis that has become the catalyst of the Abu Dhabi demarche temporarily nullifies its market consequences.

OPEC has been through the departure before. Indonesia suspended membership twice. Ecuador was released in 1992 and 2020. Gabon was released back in 1995, but returned 21 years later. Qatar left in 2019, officially citing a desire to focus on the key gas industry for itself, although this decision was the aggravation of relations with Riyadh. Angola came out in 2024 due to the understated quota. But none of the departed participants was the third largest member of the cartel with capacities of almost 5 million bpd and a quarter of the reserve capacity of the total OPEC +. The UAE is a fundamentally different case.

Among the possible following candidates for withdrawal are называютKazakhstan (from OPEC+) and Iraq. Kazakhstan is chronically exceeding its quota due to obligations to international oil companies at the Tengiz field. However, the Ministry of Energy of the country has already announced no plans to change the format of participation in OPEC+.

With the departure of the UAE, Kazakhstan’s influence as a major oil producer within the alliance may even increase. Iraq, the second largest producer of OPEC with production of 4.33 million bpd, also violated quotas. But Baghdad has promptly rejected any speculation, telling Reuters that it had no plans to leave the organization. The remaining OPEC members either do not get quotas for production reasons or are too dependent on price support to risk the exit.

Saudi Arabia will hold unity at all costs. At the May meeting, OPEC+ agreed on another increase in quotas – a clear attempt to maintain the appearance of normality, regardless of the real state of affairs. The question is not whether Riyadh will want to preserve the alliance, but whether he has the tools to keep doubtful.

The question is not whether Riyadh will want to preserve the alliance, but whether he has the tools to keep doubtful

According to the IEA’s baseline scenario, when deliveries through the Strait of Hormuz by the middle of the year, the proposal will begin to recover at a rate of 1-2 million b/d per month. The UAE is now coming out of this background. In Abu Dhabi, they hurried to assure that the production would be increased gradually, taking into account the situation. If the UAE increases production without quota restrictions, Rystad Energy estimates a potential additional supply of 1 million bpd within 6-12 months. In the normalization scenario, Brent can go into the range of $85-100 per barrel.

If Saudi Arabia responds with an increase in production for the sake of market share, and Kazakhstan and Iraq will weaken discipline, the lower limit of this range runs the risk of gaining a foothold for a long time. The UAE’s exit has not destroyed OPEC overnight, but moved the organization from a zone of controlled uncertainty where the new rules of the game have yet to be written.

What to expect Russia?

Moscow reacted to the withdrawal of the UAE from OPEC and OPEC+ in demonstrations restrained – and indicatively quickly. Kremlin spokesman Dmitry Peskov admitted that no one warned Russia in advance, but stressed that Moscow respects the decision of Abu Dhabi. Deputy Prime Minister Alexander Novak also called the UAE’s exit a “sovereign solution” and ruled out the risk of price war: “In the current situation, what can be the price war, when the market is there a deficit?” Russia, according to Novak, does not intend to leave OPEC+.

The UAE’s exit from OPEC objectively weakens Saudi Arabia as the sole leader of the cartel, and Russia is de facto turning into an indispensable co-chairman of OPEC+, without any possible competition from Abu Dhabi. Suffice it to recall how during 2021-2023 the UAE with growing discontent watched as Russia turned a blind eye to Kazakhstani overproduction, while not agreeing to recognize the claims of the Emirates themselves.

Moscow considers OPEC+, including as a diplomatic platform, whose membership provides regular contact with Riyadh at a time when most international dialogue platforms for the Kremlin are closed. Relations with the Saudi crown prince in all frictions retain a pragmatic working basis, given the overall interest in maintaining oil prices above the break-even point of the budgets of both countries.

At the same time, the UAE has evolved since the beginning of a full-scale Russian invasion of Ukraine into the largest transport-logistics and financial hub for the Russian economy. Trade turnover increased from $ 5.4 billion in 2021 to $ 12 billion at the end of 2025. Direct Russian investments in the UAE exceeded $25 billion.

The UAE has become indispensable for Russia for several reasons: from parallel imports of sanctioned goods and components to the transit of gold and diamonds, re-export of petroleum products and international payments. Dubai is one of the few major financial hubs where Russian companies could still open accounts and make payments under sanctions pressure. Abu Dhabi’s reversal towards the U.S., interested in weakening OPEC, and Israel is putting additional risks to existing channels.

For Russia, the question of whether it should worry about it still rests on the budget. Oil and gas revenues in the first quarter of 2026 fell by 45.4% year-on-year, and the deficit for January-March amounted to 4.58 trillion rubles, exceeding the planned figure for the whole year. The Iranian crisis will temporarily reverse the downward trend, and sanctions in the form of a “price ceiling” will not prevent you from receiving a premium from someone else’s war.

Firstly, because the “ceiling” is a poorly debugged mechanism that can be bypassed with the help of a “shadow fleet” (sanctions tankers, according to CREA, are already transporting 68% of Russian oil). And secondly, this mechanism further devastated after the EU and the UK reduced the price to $ 44.1 per barrel, and the United States left it at $ 60 (until May 16, the United States suspended the ceiling, as well as a number of other sanctions against Russian oil, under the general license of the Ministry of Finance No. 134B).

At the same time, structural problems have not gone away: the Ministry of Economic Development predicts a deficit budget until 2042. The pain threshold – the steady price of Urals below $50 per barrel – will again be at a range of reach.

The pain threshold for the Russian budget – the price of Urals below $ 50 per barrel – with a global recession or de-escalation in the Middle East will again be in the range of reach

That is why the prospect of a rapid increase in oil production of the UAE after the opening of the Strait of Hormuz is much more concerned about Moscow than the very fact of Abu Dhabi leaving OPEC / OPEC+. An additional million b/s of emirate oil on the market is, in fact, a direct deduction from the Russian budget, which is already working at the limit. The new UAE’s sovereign strategy in the Middle East is another variable in a geopolitical and geo-economic equation, on the solution of which the ability of Russia not only to finance the war, but also to maintain the current regime depends.