The Trump administration continues to reshape the Middle East, as the United Arab Emirates (UAE) announced Tuesday that, after 59 years, it would leave the Organization of the Petroleum Exporting Countries (OPEC), effective May 1. The Wall Street Journal editors assessed the move as “another foreign policy victory for American fossil-fuel energy,” while Fox Business called it “good news for the world in the long run.” The UAE’s decision will certainly have global ramifications, both economic and political; for the U.S., it likely entails a deepening relationship fraught with hazards.

OPEC is an international consortium of oil-exporting nations that sets maximum production quotas for its members in an attempt to limit international supply and thereby keep world oil prices (and therefore oil profits) high. It is, effectively, a cartel of governments instead of businesses — a group of nations that cooperate more or less as an oil-producing monopoly.

OPEC currently boasts five founding members (Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela) and seven full members (Algeria, Congo, Equatorial Guinea, Gabon, Libya, Nigeria, and the UAE). Ecuador and Indonesia have left the organization multiple times. Qatar withdrew its membership in 2019, and Angola withdrew its membership in 2024.

In 2016, OPEC signed an agreement with 10 other oil-producing nations (Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan, and Sudan) to create what is essentially a larger production cartel known as OPEC+. Together, OPEC and OPEC+ control 59% of the world’s oil supply.

The UAE has long been one of OPEC’s top oil producers, ranking somewhere in the range of second- to fourth-largest producer, depending on various factors. Before Iran shut down Gulf oil traffic on February 28, the UAE was producing some 3.6 million barrels of oil per day, or approximately 3% of the global supply.

Alongside Saudi Arabia, OPEC’s top producer, the UAE also has the most flexibility to increase or slow production, enabling OPEC to manipulate global markets in classic cartel behavior. Thus, the UAE’s decision to exit OPEC deals a significant blow to the organization’s ability to control world oil prices.

Economic Implications

More importantly, the UAE’s decision to leave OPEC will likely lead to a worldwide decline in oil prices, at least in the medium- to long-term. “Having invested heavily in expanding energy production capacity in recent years, the bigger picture is that the UAE has been itching to pump more oil,” reports Capital Economics. Freed from the quotas set by OPEC, the UAE may expand production from 3.6 million barrels per day to at least 5 million barrels per day by 2027, a 40% increase for the country and more than 1% increase for all global oil production.

According to the unchanging principles of supply and demand, an increase in the supply of oil will lead to a corresponding decrease in the price, until the market reaches a new equilibrium. This is also what we would expect when a major producer stops cooperating with a cartel; the result is increased competition in the market, leading to more production and lower prices.

There are two major caveats. First, the two preceding paragraphs assumed that all other factors would remain unchanged when the UAE expands its oil production. Of course, the real world is more dynamic, and other oil producers would likely respond to such a dramatic increase in Emirati supply. Of most relevance, the remaining OPEC nations could agree to cut production further to offset (or partially offset) the UAE’s increased production, in order to maintain roughly the same price for oil.

The incentive for OPEC countries to do so is that some have inefficient oil industries that can only turn a significant profit at higher prices. The disincentive for OPEC countries to do so is that they would cede further market share and produce less oil on which to make a profit. The largest burden for production cuts would likely fall on Saudi Arabia, which would likely look unfavorably on ceding market share to it peninsular rival. Thus, the discomfort of OPEC nations would likely work out to the benefit of the rest of the world, which would then be able to obtain energy at lower prices.

The second caveat concerns the Iran war. Iran’s illegal closure of the Strait of Hormuz cut off approximately 20% of world oil production from global markets, causing a sharp increase in world oil prices. The UAE is able to transport some oil over land to a pipeline terminus on the Gulf of Oman, but its ability to increase capacity is largely nullified while the Strait of Hormuz remains more-or-less closed. Thus, any benefit to world oil prices from an increase in UAE production would only take effect sometime after the conclusion of the Iran war.

Geopolitical Implications

The UAE’s departure from OPEC also has geopolitical implications, as it moves one of the most prosperous Gulf oil states away from a largely anti-American alliance towards a much more America-friendly posture.

Most Americans likely know little about OPEC except that it has often maintained an uneasy relationship with the United States. Most famously, Arab members of OPEC embargoed the U.S. during the 1973 Arab-Israel war, leading to the 1973-74 oil crisis, which featured gas lines, sky-high prices, and a nationwide reduction of speed limits to 55 mph. Having core members like Venezuela, Iraq, and Iran — longtime adversaries of the U.S. — certainly has not helped.

However, the UAE is currently furious with Iran, which has likely informed its decision to withdraw from OPEC. Not only is Iran blockading the bulk of Emirati oil production from reaching markets — both damaging the nation’s budget and undermining the whole premise of OPEC — but Iran has also responded to American bombardment by firing hundreds of missiles and drones at the UAE, causing significant damage in the country that is not part of the war.

When the UAE already believed that OPEC no longer worked in their favor, such major affronts by one of its founding members surely hastened the Emirati exit.

The UAE also has a strained relationship with Saudi Arabia over both its OPEC quota and geopolitical influence. The UAE’s greatest security concern is for reliable food imports, which makes sense given the arid desert in which its burgeoning urban centers sit. To secure its food sources, the UAE has invested some $47 billion in agriculture, ports, and security installations across 12 East African nations.

This campaign of regional influence puts the UAE at odds with Saudi Arabia, particularly in Yemen, where the former allies against the Iran-backed Houthis now back different factions in that nation’s ongoing civil war. The UAE wants a foothold in Yemen to secure its maritime network, while Saudi Arabia views the nation as an important buffer state.

On December 30, 2025, Saudi Arabia launched airstrikes against the UAE-backed Southern Transitional Council (STC) at the Port of Mukalla, halting the STC’s rapid territorial gains and leading to the group’s total dissolution on January 9, 2026. If, say, the U.K. (or Pakistan) had bombed American tribal allies in Afghanistan in 2003, the U.S. would have been pretty upset, too.

Emirati officials claim that their disagreements with Saudi Arabia were not the reason for their leaving OPEC, but they certainly soured the relationship.

No, the UAE’s best reasons for leaving OPEC is that they felt like they were always getting the short end of the stick. Due to internal instability, numerous other members received exemptions to pump oil beyond their quotas — Libya, Venezuela, and even Iran. Nations like Iraq had no exemption but exceeded their quota anyways. Despite the grace shown toward other members, the UAE lobbied unsuccessfully to win a larger quota for itself, despite heavy investment in expanding its infrastructure.

Meanwhile, OPEC became less relevant as a global cartel as other competitors expanded their own oil production. Most notably, the U.S. increased its oil production from 5.4 million barrels per day in January 2010 to 13.2 million barrels per day in January 2026. Brazil, Canada, and Guyana also increased their oil production, and American oil pioneers are now exploring deposits in Argentina. The UAE wants in on the global trend toward expanded oil production, and the constraints of OPEC held it back. So, it cut itself loose.

The decision continues a reshuffling of geopolitics in the Middle East, which sees the UAE increasingly turn away from its immediate neighbors and toward the United States.

Unlike some other Middle Eastern nations, the UAE’s affinity toward the U.S. also includes an affinity toward Israel. The UAE was one of four Muslim-majority nations to normalize relations with Israel during the first Trump administration’s push for the Abraham Accords. In December 2025, the UAE was revealed to be the undisclosed buyer in a $2.3 billion arms deal with an Israeli manufacturer. This week, further reports revealed that Israel lent the UAE an Iron Dome air defense system and troops to operate it early in the Iran war.

The UAE and Israel have also cooperated on Somaliland, a former British colony that seceded from the rest of Somalia in 1991 and maintains its own autonomous government. Israel became the first nation to recognize Somaliland as an independent country on December 26, 2025, and the UAE helped prepare the first state visit. The UAE maintains a port and military base in Somaliland as part of its footprint to defend its interests in Eastern Africa.

There are limitations to the UAE’s political realignment. Although it is departing OPEC, the UAE remains a member of the Organization of Arab Petroleum Exporting Countries (OAPEC), which also includes Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Qatar, Saudi Arabia, Syria, and Tunisia. It also remains part of the Gulf Cooperation Council (GCC), which also includes Bahrain, Kuwait, Oman, Qatar, and Saudi Arabia.

But the UAE’s departure from OPEC, following seven years after the departure of fellow Gulf oil state Qatar, could induce other cartel members to reconsider their own commitment to the organization and start a domino-like chain reaction. “If the U.A.E. exit is a portent, the OPEC cartel may eventually break up on its own under the weight of competition,” said The Wall Street Journal editors.

While the UAE’s departure from OPEC is a positive development in that it likely increases American influence, American policy makers should also remember to handle the relationship with care. For all of its friendship toward the U.S. and Israel and opposition to political Islam, the UAE is no model Western nation. It maintains apostasy and blasphemy laws, both of which it has enforced in the past 10 years, as Family Research Council has documented.

The UAE is also not above sponsoring ruthless separatist groups when it believes they serve its interests. For instance, in the ongoing Sudanese civil war, the UAE provided support to the Rapid Support Forces (RSF), a separatist militia that committed atrocities last year during the sack of El Fasher.

Thus, just because the UAE is migrating toward the U.S. does not mean it has become a good actor. It remains exactly the sort of nation you would expect to find ruled by oil-rich Muslim sheiks on the Persian Gulf. Yet there are both political and economic benefits to the U.S. from its decision to depart OPEC. Most immediately, once the war concludes, the increased competition (and likely volume) of global oil production should result in lower oil prices worldwide.