UAE vs OPEC: victims of war and politics

XBR/USD

Key zone: 108.00 -112.00

Buy: 112.50 (against a strong positive fundamental backdrop); target 115,00-117.50; StopLoss 111.80

Sell: 107.50 (upon a decisive break of 108.00); target 105.00-103.50; StopLoss 108.20

The UAE’s decision to leave OPEC caught its partners off guard after nearly six decades of cooperation. The Alliance now faces a difficult battle to preserve its influence in a rapidly changing global oil market.

Reminder:

• The decision to exit was not spontaneous — tensions had been building for years. The UAE invested billions of dollars into expanding production and planned to raise capacity to 5 million barrels per day by 2027. However, existing quotas prevented full utilization of this potential.
• A major issue is non-compliance by other members. Several OPEC+ countries, including Iraq and Russia, have consistently exceeded production limits. As a result, financial and regulatory discipline within the Alliance has weakened: some countries cut output while others effectively operate without constraints. For the UAE, this meant lost revenue without real market influence.
• The conflict was further intensified by strategic differences with Saudi Arabia. Riyadh seeks to support prices through output cuts, even at the cost of market share. The UAE, by contrast, prioritizes increasing volumes and capturing market share — especially amid rising production in the U.S. and other non-OPEC countries.

The final trigger was the military conflict: the closure of the Strait of Hormuz has severely disrupted regional exports. Under such conditions, quotas lost practical meaning, prompting the UAE to exit agreements at a moment that minimizes short-term market risks while maximizing future flexibility.

The market has largely ignored the split within OPEC, as it is currently driven by supply shortages and political uncertainty. Attempts to fully reopen transit through Hormuz have failed so far, leaving little reason for oil prices to decline.

In fact, the market is facing a supply deficit. Even a potential increase in UAE production cannot quickly shift the balance. Moreover, inventories continue to fall: according to API data, U.S. crude stocks dropped by nearly 1.8 million barrels in a week. This supports prices and offsets the impact of the UAE’s exit.

The main consequences will emerge later — analysts view this as a negative factor over the medium to long term. If other countries follow the UAE, OPEC may retain its name, but its ability to control the market will be significantly weakened.

So we act wisely and avoid unnecessary risks.

Profits to y’all!