-- The United Arab Emirates' decision to withdraw from the Organisation of the Petroleum Exporting Countries potentially leads to a higher risk of oversupply in the oil market and lower prices over the medium term, according to Wood Mackenzie.
In an analysis published Wednesday, the research firm said it expects the exit's near-term impact on global oil markets to be limited. However, the supply dynamics from 2027 are anticipated to be affected, with the UAE, which accounts for an estimated 14% of OPEC's capacity, being able to take a higher share of oil demand.
"UAE's departure from OPEC will have minimal impact on market fundamentals in 2026, even if the Strait of Hormuz reopens. Gulf countries, including the UAE, will take months to return to pre-war production volumes. Beyond this year, losing the UAE will compound OPEC's challenge to balance the market and increase the risk of oversupply weakening prices," Chairman and Chief Analyst at Wood Mackenzie Simon Flowers said. The firm also said the UAE's decision also marks "the most significant fracture" in the oil producer group's history.
The UAE government announced that it will be leaving both OPEC and OPEC+, effective May 1.