Analysts say the UAE could ultimately raise its oil output by as much as 30% above earlier quota-limited levels.
The immediate market reaction to the UAE’s potential departure from the OPEC alliance reflects two opposing forces: current geopolitical tightness and longer-term uncertainty over supply.
Brent crude oil rose above $111 per barrel, driven mainly by the Strait of Hormuz tensions and the Iran conflict. However, traders also cautioned that the exit of a major spare-capacity producer from coordinated supply management could reduce future price stability and discipline in the market.
Analysts say the UAE could ultimately raise its oil production by as much as 30% above earlier quota-constrained levels, depending on the pace at which new capacity comes online.
That creates three possible market scenarios:
Scenario 1: Gradual increase (200,000–300,000 bpd)
Minimal impact on prices, with markets likely able to absorb the additional supply without disruption.
Scenario 2: Moderate expansion (500,000–1 million bpd)
Could limit upside in prices, particularly once shipping conditions through the Strait of Hormuz stabilise.
Scenario 3: Full-capacity deployment (1 million+ bpd)
May place downward pressure on prices unless global demand growth accelerates significantly.
The longer-term implication is as much psychological as physical. Historically, OPEC’s influence on prices has depended heavily on spare capacity and coordinated signalling. The exit or reduced role of a major contributor could weaken that signalling power.
However, markets are unlikely to see immediate oversupply. Ongoing disruptions in the Strait of Hormuz continue to constrain flows, while global inventories remain tight after a prolonged period of geopolitical shocks.
Instead, traders may view this as the beginning of a more flexible supply regime, where major producers balance cooperation with independent strategy. In such an environment, price volatility could increase, while the ability of countries like the UAE to quickly add barrels during disruptions becomes increasingly important.
