Emirates leave Opec: Will Russia now be left behind?

On May 1, the United Arab Emirates (UAE) left the Opec oil cartel. In the announcement by the state news agency WAM, the move is justified with a "review of production policy" and "our efforts to meet the urgent needs of the market". This means that the Emirates want to produce more oil than they are currently entitled to via the production quota system of Opec and the expanded Opec+ alliance, which the Emirates are also leaving. Hormuz crisis overshadows Opec exit The Emirates have been complaining for years, particularly to Saudi Arabia, the dominant partner in the alliance, that their own production quota is too low. Now is the "perfect time" to leave because it will only have a minimal impact on the oil price, the UAE's Energy Minister, Suhail Al Mazrouei, told the media. He was referring to the fact that his country was recently far from reaching its own Opec production quota of 3.4 million barrels per day. In March, oil production in the Emirates amounted to just 2.4 million barrels per day, according to the International Energy Agency (IEA). This was 1.2 million barrels per day less than in February. The slump is only partly explained by the closure of the Strait of Hormuz, as the Emirates have an export terminal on the Gulf of Oman and are not as reliant on transportation through the strait as Kuwait, for example. However, the UAE and its oil infrastructure in particular have been a particularly strong focus of Iranian retaliatory strikes since the US and Israeli attack on Iran at the end of February. In fact, the oil markets barely reacted to the UAE's withdrawal from Opec. Two days after the decision was announced on April 28, the oil price reached its highest level since the crisis month of March 2022 at USD 126 per barrel. The markets' attention was focused entirely on the renewed rise in tensions between the US and Iran and the closure of the Strait of Hormuz. Opec in "existential crisis" Nevertheless, observers see the move as serious. Javier Blas, the renowned commodities columnist for the US business service Bloomberg, sees Opec in the "biggest existential crisis" of its 65-year existence. Unlike previous exits, including Qatar in 2019 and Angola in 2023, the UAE has more geopolitical influence, more oil and, above all, more money to go its own way, according to Blas. Other countries could take this as an example, says the analyst. He counts Opec founding member Venezuela, which could leave the oil cartel after possible new elections and a probable change of power, as one of the biggest shaky candidates. According to Blas, Kazakhstan could follow the UAE's move in the expanded Opec+ cartel with Russia as a heavyweight. According to the IEA, Russia's neighbor produces around 1.4 million barrels of oil per day, significantly more than its Opec+ quota of around 1 million barrels per day. Siluanov warns of oil price collapse The consensus among observers is that the weakening of Opec will depress the oil price in the long term. Russia's Finance Minister Anton Siluanov is apparently of the same opinion. The Hormuz blockade is currently still limiting oil supplies, he explained at an event. But if, after the crisis, the Opec countries produce as much oil as they can without consulting each other, prices will fall, the minister noted. Russia must make provisions for this eventuality and expect at least three years of low oil prices and correspondingly low oil revenues for the state budget. According to Siluanov, it will take that long for the market to adjust and for US shale oil producers, for example, to have to give up. For this to happen, the oil price would have to permanently fall below the cost price of the US fracking industry, which according to Siluanov is 60 dollars per barrel. Deputy Prime Minister Alexander Novak, who is responsible for the energy sector in the government, commented less clearly on the Emirates' withdrawal from Opec. The Iran crisis had led to an oil deficit, which is why a "price war" between the producing countries "in the current situation" was out of the question, Nowak explained. He did not address the time after that in his remarks. Controversial production figures How much oil the UAE produces is disputed. In its assessment for 2025 published at the end of April, Opec only puts the volume at an average of 3.1 million barrels per day. The International Energy Agency (IEA), on the other hand, estimates the volume at 3.46 million barrels, while the economic service S&P Global even puts it at 3.55 million barrels. There are similarly large deviations only for Iraq's production. For the other members of the cartel, the IEA and Opec are generally closer to each other. As early as 2024, S&P Global suspected that the Emirates were systematically underreporting oil production figures in order to conceal the fact that they were exceeding their production quotas. From January to October 2024, the Emirates exported an average of 3.6 million barrels of crude oil per day by ship. The Opec production quota during this period was only just under 3 million barrels per day. Based on the official Opec figures, the Emirates were the eighth largest producer in the world last year with 3.1 million barrels of crude oil per day. This puts the small Gulf state in the second tier of oil countries, together with China (4.3 million barrels), Iraq (3.8 million), Brazil (3.7 million) and Iran (3.3 million). The three oil giants USA (13.6 million), Saudi Arabia (9.5 million) and Russia (9.1 million) are in a class of their own. UAE with second-largest production reserves The state oil company Adnoc, which is responsible for practically all production in the Emirates, puts its "sustainably available production capacity" at 4.85 million barrels per day. Adnoc confirmed at the end of 2025 that it plans to increase this to 5 million barrels per day by 2027, meaning that the UAE had unused capacity of around 1.7 million barrels per day last year. In contrast, the IEA estimates the UAE's sustainable production capacity at only 4.3 million barrels per day. Accordingly, the Emirates' unused capacity in 2025 amounted to around 0.8 million barrels per day. However, even with this conservative estimate, the Emirates would have the second-largest production reserve in the world. In January 2026, i.e. before the recent Iran crisis and the loss of Russian production due to Ukrainian attacks, only Saudi Arabia was ahead of the UAE with a production reserve of 2.4 million barrels. Iraq was in third place with just under 0.6 million barrels in reserve. Emirates on the way to becoming the top exporter Opec puts the Emirates' exports last year at an average of 2.9 million barrels per day. With more than 90% of production, this would be by far the highest export share among the major producing countries. In terms of volume, the UAE ranked sixth, behind Canada (3.7 million) and Iraq (3.3 million). The USA exported just under 4 million barrels per day, and Russia, the world's second largest oil exporter, was not too far behind the UAE with 4.5 million barrels. Only Saudi Arabia, with exports of 6.4 million barrels per day, was able to clearly set itself apart. Leaving Opec and Opec+ will enable the UAE to make greater use of its production capacity. With the expansion already planned, production could increase by up to 1.9 million barrels per day compared to 2025. If almost all of this additional volume is exported as before, this could increase to 4.8 million barrels per day based on Opec's figures for 2025. The Emirates could thus replace Russia as the world's second-largest oil exporter. In addition, leaving Opec clears the way for new investments by the Emirates in oil production. "Don't be surprised if the Emirates soon announce even more ambitious production targets for 2030," commented Bloomberg analyst Javier Blas. The Belgian commodities information service Kpler estimates that China, among others, is likely to purchase more oil from the Emirates in the future. Russia would be doubly affected by this. Not only could it lose market share in China, the most important buyer of Russian oil, to the Emirates. The additional oil supply from the Gulf region would also push down import prices to China and thus put pressure on Russian export revenues. This article first appeared in the exclusive newsletter of the German-Russian Chamber of Commerce Abroad The post Emirates leave Opec: Will Russia now be left behind? appeared first on ostwirtschaft.de.