Minus one "volunteer": Seven OPEC+ countries held their first meeting without the UAE

MOSCOW, May 3 - PRIME. Seven OPEC+ countries with voluntary production restrictions (Russia, Saudi Arabia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman) held their first meeting following the UAE's departure from the agreement, where they approved an increase in the maximum allowed production level by 188,000 barrels per day in June. According to experts surveyed by RIA Novosti, the commitment of the "seven" to an unchanged strategy despite the energy crisis due to the situation in the Middle East and the loss of one participant is driven by their desire to maintain market share at a propitious time. With the opening of the Strait of Hormuz, OPEC+ countries from the Persian Gulf will be able to ramp up production without significantly impacting prices. "The opening of the Strait of Hormuz will elicit a psychological reaction from the market; additionally, if you announce that you've agreed to increase quotas, it will negatively affect prices. If you have been increasing quotas every month, you can say: 'We will increase production because the quotas were already high.' This is how they aim to smooth further market impact," said Igor Yushkov, a leading analyst at the National Energy Security Fund.

Full Energy Crisis

The active phase of the conflict between the U.S. and Israel with Iran that began in late February led to the closure of the Strait of Hormuz, a critical route for energy resources from the Gulf countries. Consequently, oil production in the region started to decline. According to OPEC's April report, Iraq's production fell in March by 2.6 times to 1.625 million barrels per day, and Kuwait's decreased by 2.1 times to 1.213 million barrels per day. The UAE reduced output by 1.8 times in a month to 1.892 million barrels per day. Saudi Arabia cut production by 23% to 7.799 million barrels per day. The global oil market is losing 10-12 million barrels daily due to the Middle Eastern conflict, with a cumulative shortfall of approximately 600 million barrels, stated Russian Deputy Prime Minister Alexander Novak. He repeatedly emphasized that the world is experiencing the largest energy crisis in 40 years and that restoring oil supplies will take at least several months.

UAE Exits the Chat

The Emirati state news agency WAM reported on Tuesday that the UAE is exiting OPEC and OPEC+ effective May 1. This decision is directly related to the effective closure of the Strait of Hormuz and was made considering the investments made to increase oil and gas production and in petrochemicals in the UAE, stated the country's Minister of Energy and Infrastructure Suhail Al-Mazrouei. According to a source from one of the OPEC delegations speaking to RIA Novosti, the organization was not informed of the country's intentions. The Emirates also did not notify Russia of their decision, reported Dmitry Peskov, the press secretary of the President of Russia. Now, in essence, the UAE is no longer bound by any production limitations they adhered to under the agreement. Kpler's head of OPEC+ analysis, Amena Bakr, estimated that the UAE could increase oil production to 4-4.2 million barrels per day within six months. Abu Dhabi's state oil and gas company, ADNOC, has already announced plans to attract 200 billion dirhams (55 billion dollars) for development projects by 2028. According to Iqbal Guliyev, Dean of the Faculty of Financial Economics at MGIMO and Doctor of Economic Sciences, the exit from OPEC and OPEC+ is an important political gesture, although its effect is currently limited as the region is already living in a state of heightened turbulence. "In the long term, this step could initiate competition for market shares and undermine the previous model of coordinated restrictions. But right now, the situation in the Strait of Hormuz determines everything and how much investors are willing to pay for the risk," he told RIA Novosti.

Stability is a Sign of Mastery

Despite the surrounding events, OPEC+ remains committed to its strategy. The increase in the production ceiling in June is comparable to the May increase of 206,000 barrels per day — removed will be the share of the UAE, which declared its exit from OPEC and OPEC+ on May 1. The seven OPEC+ countries, in addition to the established production quotas for all agreement participants, have additional limitations. The UAE, having exited OPEC and OPEC+, also participated in these restrictions. Starting from April 2025, participants will gradually abandon their restrictions, meeting monthly to discuss plans for the next month. In September 2025, eight countries, including the Emirates, prematurely completed their exit from voluntary restrictions amounting to 2.2 million barrels per day, and in October began a gradual exit from further production cuts of 1.65 million barrels. According to Yushkov, the strategy of OPEC+ over the past two years has been to regain its market share that the alliance may have lost while cutting oil production. "Other countries that are not part of OPEC+ have capitalized on this. Both the U.S. and Guyana, as well as Brazil and Canada have increased production, capturing our market shares. Now we see that OPEC+ has decided that it must fight for market share," noted the expert. An independent energy expert, Kirill Rodionov, emphasized that the quota of the seven countries for the end of June will exceed by 2.94 million barrels per day the level of March 2025, when the exit from restrictions began. According to him, the current geopolitical conditions allow OPEC+ to increase quotas without the threat of a sharp drop in oil prices. Rodionov did not rule out that if the acute phase of the conflict with Iran is not resolved by May, the alliance will decide to increase the production ceiling for July similarly. "The price of Brent oil is close to 110 dollars per barrel, which creates a favorable backdrop for quota increases. For the market, the most critical factor remains the crisis surrounding the Strait of Hormuz, while quotas are on the periphery of attention," commented Sergey Tereshkin, General Director of Open Oil Market. Experts remind us that there will be no actual increase in production now because, due to the conflict, Persian Gulf countries are significantly lagging behind their OPEC+ quotas. In March, the group of eight countries (including the UAE) produced 6.877 million barrels below the target level that considers previous overproduction compensations, according to RIA Novosti calculations based on OPEC's report. "But afterwards, when the Strait of Hormuz is liberated— which is relevant for Middle Eastern countries— they will immediately be able to ramp up production because they've effectively accumulated additional quota during these months," added Yushkov. Source: Prime