Seven major OPEC+ producers have increased their oil production quotas for June, adding 188,000 barrels per day to their combined production capacity. According to The Times of India, this increase is part of their collective commitment to support oil market stability. The statement issued by OPEC+ did not mention the United Arab Emirates, which exited the body earlier this week, signaling continuity within the producers' alliance despite the major organizational shift. The UAE officially announced its withdrawal from the Organization of the Petroleum Exporting Countries (OPEC), effective May 1, 2026, marking the end of over six decades of Abu Dhabi's association with the cartel. The nation stood as the third-largest oil producer within OPEC at the time of its announcement, following major producers Saudi Arabia and Iraq, and currently produces around 3 million barrels per day, accounting for about 3% of global oil supply.
As reported by CNBC TV18 and WAM news agency, the UAE's energy ministry emphasized that the decision aligns closely with the nation's interests and its ongoing commitment to contributing to the global market's pressing needs. The withdrawal from these organizations represents a fundamental shift in how the country approaches its role in global oil production coordination and market management. The decision comes after a comprehensive evaluation of the UAE's production policy, alongside an analysis of its current and future capacity to meet market demands. According to latest reports, the move follows what authorities described as a comprehensive review of the country's production policy, current capacity, and future energy strategy. Officials stated the decision is aimed at allowing greater flexibility in managing production levels and responding to evolving global energy market dynamics, particularly amid ongoing geopolitical tensions affecting supply routes such as the Strait of Hormuz. The UAE believes that the shortages caused by the war will require agility to respond to market demands without being constrained by the collective decision-making process of the wider group.
Crude oil prices fell nearly 1% to ₹9,417 per barrel in futures trade on Wednesday, tracking losses in global benchmarks after the UAE's announcement to quit OPEC. On the Multi Commodity Exchange, crude oil for May delivery fell ₹68, or 0.72 per cent, to ₹9,417 per barrel. In international markets, Brent crude for the June contract decreased 0.34 per cent to $104.04 per barrel, and West Texas Intermediate (WTI) fell 0.68 per cent to $99.25 per barrel in New York. However, oil prices pushed higher on Thursday, rising as much as 7% to cross the $125 mark as concerns grew over a prolonged U.S. blockade on Iranian exports and a lack of progress in nuclear negotiations, raising the likelihood of tighter supply conditions ahead. As reported by The Economic Times, Brent prices have now reached their highest levels since mid-2022 as tensions in the Iran war continue to disrupt supply flows through the Strait of Hormuz. The UAE's decision to exit OPEC+ reflects growing tensions within the bloc, particularly with Saudi Arabia, as reported by Upstox News Desk. Relations within the alliance have grown increasingly strained in recent years, with Saudi Arabia, traditionally the dominant force within OPEC, pushing to maintain production discipline while the UAE has sought to expand its output capacity and capitalise on its relatively low-cost crude.
For India, the development carries significant importance because the country imports close to 85 to 90 per cent of its crude oil requirement from overseas markets. This makes India highly vulnerable to every movement in global crude benchmarks. If the UAE begins supplying more oil independently and global crude prices soften over time, India could benefit through lower import bills, reduced inflationary pressure, better fuel cost stability and improved current account management. Since the UAE is already one of India's major crude suppliers, the exit may also create room for more direct bilateral energy agreements and supply flexibility in the coming years. Lower crude prices also provide indirect relief to sectors such as aviation, paints, logistics, chemicals, tyres and oil marketing companies that are heavily dependent on petroleum-linked input costs. The UAE has been aggressively expanding its crude oil production capacity and is targeting output capability of nearly 5 million barrels per day in the coming years, though under OPEC and OPEC+ arrangements, member nations are required to follow production quotas that often limit actual supply despite higher installed capacity.
Analysts at ING THINK said the departure of the UAE from the oil cartel is expected to have a limited immediate impact. However, they noted that it may raise supply prospects over the medium-to-longer term. As reported by The Hindu BusinessLine, they added that had this been announced at any other time, we would likely have seen more downward pressure on oil prices. Near-term price direction will continue to be driven by developments in the Persian Gulf and the timing of a resumption in oil flows through the Strait of Hormuz. ING revised its oil price forecasts for the rest of the year, now expecting Brent Crude to average $104 per barrel in the second quarter and $92 a barrel in the fourth quarter. The analysts emphasized that persistent uncertainty over the US-Iran conflict and continued disruption in the Strait of Hormuz have capped losses in oil prices, with no signs of an imminent resumption in oil flows. Jorge Leon of Rystad told Reuters that the UAE's exit marks a significant shift for OPEC, alongside Saudi Arabia, it was among the few members with meaningful spare capacity, which is central to the group's ability to influence markets. Outside the group, the UAE would have both the incentive and flexibility to increase production, raising concerns about the sustainability of Saudi Arabia's role as the primary market stabiliser and pointing to a more volatile oil market over time.
