Why the UAE left: real capacity versus OPEC quotas
The rationale behind Abu Dhabi’s decision is straightforward. Under OPEC+ arrangements, the UAE had been producing approximately 30% below its current capacity of 4.85 mb/d. Following a $150 billion investment programme, Abu Dhabi National Oil Company (ADNOC), the UAE’s state energy producer, aims to reach a 5 mb/d capacity target by 2027.
UAE Energy Minister Suhail Al Mazrouei characterised the withdrawal as a sovereign policy decision, noting that the timing was chosen to minimise disruption while the Strait of Hormuz remains closed and output is constrained. Production had already contracted sharply to approximately 1.9 mb/d in March following the Strait’s closure.
Near-term impact limited, long-term consequences profound
The immediate market impact of the departure is limited, as the Iran conflict has inflicted the most significant supply shock in recent history. OPEC production collapsed 27% to 20.8 mb/d in March as disruptions to the Strait of Hormuz shut in approximately 8 mb/d of Gulf output. In the current environment, the UAE’s quota-free status carries little practical weight – it cannot produce what it cannot ship.
The consequential question concerns what occurs once the Strait reopens. Free of OPEC quotas, the UAE could add up to 1.6 mb/d of incremental supply – equivalent to roughly 1.5% of current global demand – exerting meaningful downward pressure on prices over the medium term.
From a structural perspective, the International Energy Agency (IEA) 2025 World Energy Outlook’s Stated Policies Scenario – which assumes countries follow through on existing climate commitments – projects global oil demand peaking around 2030, with electric vehicles (EVs) displacing over 5 mb/d by that point and over 10 mb/d by 2035. In that environment, the incentive for producers shifts decisively: monetise reserves while demand is still growing.
A structurally weakened OPEC may lack the cohesion to discipline members, accelerating that dynamic. Geopolitical fragmentation, a deteriorating long-term demand outlook, and members with the financial capacity to exit are together eroding OPEC’s relevance in the global commodity market.
Brent crude: technical outlook
The second-month Brent crude oil futures contract has been consolidating between $84.50 and $109.50 per barrel following the rejection on 9 March. Overnight, the UAE’s withdrawal announcement has not materially shifted prices. Front-month futures reclaimed $110 per barrel, while the second-month contract holds near $103. While the long-term uptrend remains intact above the 200-day moving average (MA), a recent death cross between the 20-day and 50-day MAs has capped gains amid stalling US-Iran ceasefire negotiations. Resistance is likely to be encountered near $109.50, while the 20-day and 50-day MAs provide immediate support in the $97–98 range.