Goldman Sachs assesses that the UAE's exit from OPEC poses a greater medium-term than short-term oil supply upside risk, constrained by the closure of the Strait of Hormuz. The move follows years of tension over production quotas and coincides with the US-Israel war on Iran, with the UAE facing significant Iranian attacks. Goldman forecasts UAE crude production to recover to 3.8 million bpd by October 2026, but acknowledges upside risk due to the exit.
The UAE's exit from OPEC, coupled with Aramco's production halt and the Strait of Hormuz crisis, is causing significant disruption in global energy markets, leading to supply chain instability and rising oil prices. This poses immediate challenges for import-dependent economies like India. OPEC's diminished influence and the potential for long-term market volatility are key concerns.
The UAE's departure from OPEC+ on May 1st marks a significant shift in the group's history, with Abu Dhabi expected to increase production. This report analyzes OPEC's supply management capacity, production growth scenarios, and the winners and losers in the global oil market. The UAE's exit will transform OPEC's supply buffer into a Saudi Arabian question and could alter oil price cycles.