UAE Quits OPEC as Iran War Sends Oil Above $110 a Barrel and Global Energy Markets Reel
The United Arab Emirates has announced its withdrawal from OPEC and OPEC+, in a move that analysts say could accelerate the cartel's fragmentation at the worst possible moment for global energy markets — with oil prices already above $110 a barrel, the Strait of Hormuz largely closed since early March, and the Iran conflict showing no signs of imminent resolution despite stalled peace negotiations mediated by Pakistan.Background
The Organization of the Petroleum Exporting Countries has been the dominant force in global oil markets since its founding in 1960, coordinating production levels among its members to manage prices and revenues. The UAE, currently the third-largest producer within OPEC, has been a member since 1967 and has played a significant role in the cartel's decision-making. However, tensions between Abu Dhabi and other OPEC members — particularly over production quotas — have been building for years.
The UAE has long argued that its quota allocation within OPEC does not reflect its actual production capacity, which has grown significantly following major investments in its oil fields. In 2021, the UAE threatened to leave OPEC over quota disputes before ultimately remaining in the cartel after a compromise was reached. The current conflict has provided the catalyst for a more definitive break, with the UAE's leadership apparently concluding that the cartel's constraints are no longer in the country's interests.
The Iran conflict, now in its 60th day, has fundamentally altered the dynamics of global energy markets. Iran's closure of the Strait of Hormuz — through which approximately 20% of the world's oil and gas passes — has disrupted supply chains and sent prices surging. The US has implemented a counter-blockade, redirecting vessels and seizing at least three ships suspected of violating sanctions. A ship loaded with liquefied natural gas passed through the Strait for the first time since early March this week, raising cautious hopes of a partial reopening, but the situation remains highly volatile.
Key Developments
The UAE announced its withdrawal from OPEC and OPEC+ this week, effective immediately. The decision is attributed to the Iran conflict's impact on global energy markets and the UAE's desire for higher production quotas that the cartel has been unwilling to grant. Analysts suggest the move could encourage other members — particularly Kazakhstan, which has also expressed frustration with its quota allocation — to follow suit, potentially accelerating the cartel's fragmentation.
Oil prices have climbed above $110 a barrel, with Brent crude briefly exceeding $111 before settling at around $105-$110. Analysts warn that a prolonged blockade of the Strait of Hormuz could push prices towards $120-$125 per barrel, with severe consequences for the global economy. The UAE's decision to leave OPEC adds further uncertainty to an already volatile market, as it removes one of the cartel's more moderate voices and could lead to increased UAE production that partially offsets the supply disruption from the Strait closure.
Peace negotiations between the US, Israel, and Iran, mediated by Pakistan, remain at a standstill. Iran is expected to submit a revised peace proposal after President Trump rejected an earlier version, with the deadlock primarily over Iran's nuclear programme and control of the Strait of Hormuz. Iran's Foreign Minister Abbas Araghchi met with Russian President Vladimir Putin this week to discuss the conflict, suggesting that Moscow is positioning itself as a potential mediator or spoiler in the negotiations.
President Trump has claimed that Iran has informed the US it is in a "State of Collapse" and wants the Strait of Hormuz opened, though Iranian officials have not confirmed this characterisation. German Chancellor Friedrich Merz criticised the US approach to the war as "ill-considered," drawing a sharp rebuke from Trump. The UK summoned Iran's ambassador over social media posts urging Iranian citizens to "give their lives" for their country.
Why It Matters
The UAE's departure from OPEC is significant not just for its immediate market impact but for what it signals about the long-term future of the cartel. OPEC's authority has been declining for years as US shale production has grown and as the energy transition has begun to reduce the long-term demand outlook for oil. The Iran conflict has accelerated these dynamics, creating a situation in which individual members are calculating that their national interests are better served outside the cartel's constraints than within them.
For the global economy, the combination of high oil prices, supply disruption, and geopolitical uncertainty is creating conditions that have not been seen since the 1970s oil shocks. The difference is that today's economies are somewhat less oil-intensive than they were 50 years ago, and the energy transition has created alternative sources of supply. But the short-term impact on inflation, growth, and living standards across the world — including in the UK and Ireland — is severe and likely to persist for as long as the conflict continues.
Local Impact
For households and businesses across the UK and Ireland, the oil price surge is feeding directly into higher fuel costs, energy bills, and the price of goods and services. UK petrol prices have risen sharply in recent weeks, and energy suppliers are warning of further increases to come. The Bank of England's decision on interest rates tomorrow will be shaped in part by the inflationary impact of higher energy prices. In Ireland, where energy costs are already among the highest in Europe, the government has confirmed €220 million in fuel support schemes for farmers and hauliers — a recognition that the economic impact of the oil price surge is being felt acutely across the economy.
What's Next
The UAE's formal withdrawal from OPEC will take effect in the coming weeks, with the cartel expected to hold an emergency meeting to assess the implications. Peace negotiations between the US, Israel, and Iran are expected to resume after Iran submits its revised proposal. The next OPEC+ production meeting is scheduled for June. Oil market analysts will be watching closely for any signs of a Strait of Hormuz reopening, which would be the single most significant development for global energy markets. The G7 summit in June is expected to address the economic consequences of the Iran conflict.
Sources: CNN — Iran war live updates, 28 April 2026; Everything Briefing — April 29 2026
