UAE Opec exit forces oil into fresh uncertainty
Oil markets are absorbing a structural shock following the United Arab Emirates’ decision to exit Opec after six decades, a break that strikes at the cohesion of a group long relied upon to shape global supply and pricing, affirms the CEO of one of the world’s largest independent financial advisory organisations.
The analysis from Nigel Green, CEO of deVere Group, comes as oil prices edged higher on the news but stopped short of a breakout, with Brent crude trading around $111 a barrel after briefly approaching $120 amid escalating tensions involving Iran and disruption risks in the Strait of Hormuz.
He comments: “A core pillar of oil market stability has been removed by this unexpected move.
“The UAE is not a marginal player. It’s one of the very few producers with both meaningful spare capacity and the operational flexibility to bring barrels online quickly, which has been critical to how Opec has managed supply and influenced pricing.
“Removing that capacity from a coordinated structure is likely to create a more fragmented supply outlook at a point where markets are already under pressure from the US-Iran war and constrained shipping routes.”
He continues: “Oil is trading higher, but the reaction has, so far, been pretty measured.
“Markets are already looking beyond the headlines to what this means for future supply. There’s no immediate loss of barrels, so the move reflects uncertainty pricing rather than a genuine supply shock.
“Near-term disruption risk is pushing prices up, while the prospect of weaker producer coordination is limiting how far that rally extends.”
Short term, conflict risk remains dominant. Any sustained constraint through Hormuz keeps crude firmly supported, and a return toward $120 remains “entirely plausible” if tensions intensify or shipping flows are disrupted further.
Focus is shifting toward the structural implications for Opec’s influence. The group’s pricing power has long depended on a small number of members with spare capacity acting in coordination, particularly Saudi Arabia and the UAE. A divergence between those producers weakens that model.
Nigel Green says: “Medium term, the balance shifts. A less cohesive Opec reduces the credibility of production caps and forward guidance. The UAE has both the economic incentive and the technical capacity to increase output independently, especially as producers seek to maximise revenues during a period of still-strong demand.”
Global oil consumption remains near record levels at more than 102 million barrels per day, supported by demand from major Asian economies and a continued recovery in aviation. Supply growth outside Opec has been inconsistent, leaving markets exposed to internal fractures among exporters.
“Additional UAE supply over the next 12 to 24 months would, we expect, begin to reshape pricing dynamics.
“Assuming geopolitical tensions stabilise, crude could move back into an $80 to $95 range as incremental barrels come through. Volatility, however, becomes embedded because coordination risk does not disappear.”
The geopolitical dimension extends beyond energy markets.
The UAE’s repositioning comes alongside closer financial engagement with the US.
President Trump has repeatedly criticised Opec’s role in sustaining higher oil prices, and recent discussions around potential currency support arrangements between US and UAE authorities point to deeper strategic alignment.
“Stronger ties between the UAE and the US introduce a different layer of influence,” notes the deVere chief executive.
“Energy strategy, liquidity support, and currency stability begin to intersect. A major producer stepping outside cartel constraints while strengthening bilateral economic links with Washington alters how global markets interpret supply signals.”
Longer-term implications are tied to the trajectory of global energy demand and the economics of production. Low-cost producers with expansion capacity face increasing pressure to accelerate output while demand remains structurally high.
Nigel Green explains: “Longer term, this reflects a strategic shift already underway.
“Producers with scale and low extraction costs are prioritising volume, aiming to monetise reserves before demand eventually plateaus. Sustained collective discipline becomes far harder to maintain and competitive pressure increases across the market.”
Markets are already responding across asset classes. Energy equities have moved higher alongside crude, while inflation expectations remain sensitive to prolonged oil strength given the direct pass-through to transport and industrial costs.
Nigel Green concludes: “Energy markets are becoming harder to read.
“Fewer shared decisions, more independent moves, and rising geopolitical pressure mean prices will likely swing more and adjust faster.”