UAE OPEC exit is not without precedence. Who could be next?

The United Arab Emirates’ shock decision to leave OPEC is reverberating across global energy markets and exposing cracks in the powerful oil cartel as production quotas risk prompting other members to follow suit.

The country’s decision is also noteworthy, as the blockade of the Strait of Hormuz, following OPEC member Iran’s missile and drone attacks for weeks, has disrupted its exports and put pressure on the backbone of its economy.

“UAE’s exit is another chapter in the group’s changing membership,” said Andy Lipow, president of Lipow Oil Associates. “If countries that meet their quotas become disgusted with those who don’t, we could see additional outflows that could neutralize OPEC as a cartel,” he told CNBC via email.

Countries such as Qatar, Ecuador and Angola left the group Citing frustration with quotas or changing national priorities in recent years. Angola left in 2024, while Qatar ended its membership in 2019.

“While the UAE left OPEC, they were not the first and may not be the last,” Lipow said. he added.

A familiar tension lies at the heart of the UAE’s decision: Members who have invested heavily in expanding production capacity are increasingly reluctant to be constrained by quotas designed to support prices.

The country pumped about 2.37 million barrels of oil per day in March, compared to its sustainable capacity of about 4.3 million barrels per day. According to the latest IEA data.

‘Flight risks’

Analysts have noted many potential “flight risks” countries that are upset with OPEC+ restrictions and may consider giving up their membership.

Matt Smith, Kpler’s chief oil analyst, flagged Kazakhstan as a key candidate, noting its persistent overproduction. “Kazakhstan produced a lot last year, so they may be seeing this as a potential for them to leave the group as well,” Smith said, adding that Nigeria could also be a country to watch out for.

Nigeria, Africa’s largest crude oil producerIt has increasingly prioritized domestic refining, particularly through the Dangote refinery, reducing its dependence on export markets and potentially weakening the incentive to adhere to quotas.

Smith explained that reinforcing the Dangote refinery means it will be able to process more oil in the country and achieve higher margins of valuable fuel. This reduces OPEC’s reliance on its strategy of supporting crude oil prices through supply constraints and instead increases its focus on maximizing volumes and lower yields.

“Nigeria is in a similar position of not wanting to be hindered: it’s a potential flight risk because it’s becoming increasingly self-sufficient,” Smith said. “By diverting its domestic crude production to the Dangote refinery, Nigeria has become less dependent on global market dynamics.”

Market watchers said Venezuela is another possible rival. With production recovering faster than expected and a potentially more US-friendly political environment emerging, Caracas may seek greater flexibility.

“Venezuela could be next in line toward a more U.S.-friendly position after a change in leadership,” said Saul Kavonic, energy analyst at MST Marquee.

Kpler’s Smith also said Venezuela is a potential candidate because it is increasing production and exports faster than expected. Venezuela’s oil exports exceeded one million barrels per day In March for the first time since September.

OPEC+ imposes core production quotas that reportedly reduce output by approx. 2 million barrels per day By the end of 2026.

Eight major OPEC+ producers, including Saudi Arabia and Russia, agreed to begin cautiously easing voluntary production cuts on April 5, according to an official OPEC statement; About 206,000 barrels per day gradually returned to the market in May from a broader cut of 1.65 million barrels per day first introduced in 2023, according to an official OPEC statement.

Fragmented but necessary?

The UAE’s departure comes at a time when OPEC is grappling with disintegration. Several members, including Iran, Libya and Venezuela, are exempt from quotas due to sanctions or conflict, complicating efforts to maintain compliance.

Frustration over unequal compliance could further fuel outflows, Lipow said. “Countries tired of seeing their friends OPEC and OPEC+ constantly cheat on their quotas are likely candidates to leave these groups.”

Reduced compliance could lead to more volatile oil markets. Bob McNally, president of Rapidan Energy Group, said any erosion of OPEC+ discipline would likely increase price volatility. “The main impact of this situation will be increased volatility in oil prices,” he said.

Still others argue that OPEC’s core function, which is to stabilize markets, remains intact even with fewer members.

Claudio Galimberti, senior vice president of Rystad Energy, said the group’s track record, especially during crises such as the Covid pandemic, points to resilience.

“The group has managed to stabilize the market in an incredible way over the last 10 years,” he said. “If OPEC plus had not been available during Covid, we would have had huge swings in the market.”