-- The UAE's decision to exit OPEC+ from May 1 is set to weaken the group's ability to manage global oil supply at a time when geopolitical shocks are already distorting the market, Rystad Energy strategists said in a white paper on Friday.
Rystad analysts said the move removes one of the few producers in the alliance with meaningful spare capacity and a strong compliance record, undermining OPEC+'s role as a coordinated supply manager.
Global oil markets are grappling with a sharp contraction in output following the ongoing Middle East conflict, which has disrupted regional flows and heightened risks in the Strait of Hormuz.
Rystad said crude and condensate production across key Middle East producers, including Saudi Arabia, the UAE, Kuwait, Iraq, Iran, Bahrain and Qatar, dropped from about 27.5 million barrels per day in February to losses averaging 10.6 million b/d in March.
The ongoing disruptions are forecasted to deepen to 12.9 million b/d in April before easing from mid-May if tensions subside.
Total OPEC+ output declined to 27.68 million b/d in March from about 36.76 million b/d in February, leaving production around 9 million b/d below the producer group's quota.
The cartel would respond to such disruptions by adjusting supply in normal conditions. However, the UAE's exit shifts the balance away from coordinated management toward a more competitive production environment.
Though the UAE could eventually increase output in response to price signals, its ability to do so in the near term is constrained by logistical disruptions and regional instability.
Rystad analysts said the immediate impact lies less in current supply and more in the Gulf country's future flexibility once conditions stabilize.
Global crude demand remains resilient at about 105 million bpd, suggesting tighter effective balances than headline figures imply. Though OPEC+ nominal spare capacity is estimated at about 6 million b/d, more than 65% is concentrated in Saudi Arabia and the UAE.
Rystad said with the UAE leaving the alliance, OPEC+ effectively loses control over about 1.5 million b/d of spare capacity, further limiting its ability to respond collectively to supply shocks.
Meanwhile, the UAE's departure reflects growing tension between its expansion strategy and OPEC+ quota constraints. Rystad said the country produced about 3.12 million b/d on average in 2025, below its installed capacity, largely due to production limits.
The UAE's production output stood at about 3.4 million b/d under its quota before the latest Middle East conflict.
State energy major Adnoc is investing heavily to expand capacity to 5 million b/d by 2027, with a longer-term goal of reaching 6 million b/d.
Rystad said expansion projects include the offshore Upper Zakum field and onshore assets such as Bab and Bu Hasa, alongside increased drilling activity led by Adnoc Drilling.
A disconnect in capacity
The UAE's exit from OPEC+ follows years of tension between its aggressive $150 billion upstream expansion and the production limits imposed by the coalition.
Although the UAE originally aimed for a 5 million b/d capacity by 2030, Rystad said the timeline was repeatedly accelerated.
Adnoc's sustainable capacity reached about 4.85 million b/d by late last year, fueled by expansions at giant onshore fields and offshore developments such as Satah Al Razboot and Umm Lulu.
"The gap between what Abu Dhabi has built and what it has been allowed to produce widened with each new capacity milestone," Rystad Energy analysts said.
Though the UAE's potential climbed toward 5 million b/d and potentially 6 million b/d, OPEC+ agreements kept its actual production between 3.2 million and 3.5 million b/d.
Meanwhile, its exit is also set to reshape the distribution of spare capacity within OPEC, concentrating market influence more heavily in Saudi Arabia.
Total OPEC+ production cuts stood at about 4 million b/d at the start of last year. The figure dropped to about 1 million b/d by May, with the UAE's share shrinking to just 72,000 b/d before its exit.
Though OPEC+ still nominally holds about 4.8 million b/d of spare capacity, Rystad Energy estimates that Saudi Arabia accounts for about 1.8 million b/d, close to 40% of the total.
Rystad said other producers face constraints that limit their ability to respond quickly. Infrastructure bottlenecks restrict Iraq's spare capacity, while Kuwait is contending with gradual declines at its giant Burgan field.
According to Rystad analysts, what remains is largely a Saudi question.
"Once the UAE operates as a fully independent producer outside the group's framework, and with Iraq and Kuwait facing their respective structural constraints, the levers for any meaningful supply cut or coordinated increment rest almost entirely with Riyadh," the white paper said.
The departure could also embolden other producers to reconsider their participation in OPEC+, particularly those with rising capacity and relatively resilient fiscal positions.
Rystad analysts said Kazakhstan stands out as a potential candidate. The country has repeatedly exceeded its production targets, expanded output at the Tengiz field, and clashed with the group over compliance.
"Once the UAE demonstrates that exit is viable and commercially rewarding, the template exists for others to follow," the analysts said.
Though geopolitical disruptions and existing supply constraints may temper the immediate impact of the UAE's departure, Rystad analysts say the longer-term implications are more profound.