The UAE Leaves OPEC: Hedging, Rivalry, and the Gulf's Multipolar Turn
Matheus de Freitas Cecílio
Key Takeaways:
The UAE's OPEC exit reflects a structural hedge rather than a clean pro- or anti-US signal: economic logic, Saudi rivalry, and eroding confidence in the US security umbrella are all pulling in the same direction
The dissolution of the UAE-backed STC in Yemen and the damage to the Habshan gas facility are concrete evidence that the post-Cold War Gulf security order is under serious strain
Pakistan and China's joint mediation of the US-Iran ceasefire signals Beijing's growing role in Near Eastern affairs, filling space vacated by a distracted Russia and a less reliable Washington
The UAE's exit, combined with Tehran's yuan-and-stablecoin Hormuz toll system, marks a tangible step toward delinking Gulf energy from dollar dominance, with implications well beyond OPEC
In late April, the United Arab Emirates (UAE) made a decision that brought worldwide attention to Gulf economics, energy markets, and geopolitics, as Abu Dhabi chose to leave the Organization of Petroleum Exporting Countries (OPEC), the multilateral organization focused on regulating and managing oil production and prices. While the immediate reception of this decision was to link it to the UAE's desire to produce more freely and independently determine quotas, the exit happens amidst a very delicate geopolitical context in the Gulf and the Near East at large, suggesting that more factors are at play. In this snapshot, we aim to briefly cover the interaction between economics and geopolitics in the UAE's decision, and consider what this means for an increasingly multipolar Gulf and Near East going forward.
OPEC's historical role, both in determining collaboration between significant oil exporters and in turning oil prices into an effective geoeconomic tool, is now placed under scrutiny with Abu Dhabi's decision to leave, as the UAE was the bloc's third largest oil producer. Evidently, such a significant energy player leaving cannot bode well for the organisation's future. At the same time, on the strategic front following the recent war with Iran, US efforts to manage freedom of navigation through Hormuz under "Project Freedom" faced significant initial resistance from local states, namely Saudi Arabia and Kuwait, who suspended US access to their bases and airspace, forcing a temporary pause of the operation. These events signal a more volatile, multipolar, and uncertain future for energy markets and for the region at large.
As mentioned above, the UAE's decision was chiefly interpreted as a fundamentally economic one. Abu Dhabi wants to produce more, export more, and independently set its own quotas. Against the backdrop of the global energy transition, the UAE is following the lead of other major oil exporters, including Saudi Arabia, in seeking to diversify its production mix, develop a more complex export basket, and use the substantial capital inflows from hydrocarbon revenues to build a broader, potentially manufacturing-led economy, one that can sustain the emirate's prosperity in an increasingly post-oil world. Riyadh is even more explicit in this ambition, pushing forward initiatives such as the Saudi Vision 2030 and the now significantly curtailed 'The Line' project. In this sense, maximising production and exports now, before the energy transition gains pace, can be read as a calculated effort to extract maximum economic value from hydrocarbon wealth while it remains available.
However, the UAE's decision can also be interpreted through a geoeconomic and geopolitical lens. Saudi Arabia holds a dominant position within OPEC, and the UAE's foreign policy goals have been directly or indirectly challenged by Riyadh on multiple fronts. Their diverging positions on the Yemen conflict were perhaps the most visible expression of this: the UAE backed the Southern Transitional Council (STC), while Riyadh supported the internationally recognised Yemeni government. The rift came to a head in late 2025, when Saudi airstrikes on STC positions precipitated the group's dissolution and the withdrawal of Emirati forces from Yemen entirely. UAE-Saudi rivalry has also played out in the Horn of Africa, Sudan, and Libya, theatres where Abu Dhabi and Riyadh have frequently found themselves at odds. The OPEC exit can therefore be read not only as an act of economic rationality, but as a further expression of this deepening rift between the two Gulf powers.
The already strained state of UAE-Saudi relations was further complicated by the broader upheaval unfolding across the region. The US-Saudi axis has long been a cornerstone of Gulf security, meaning that US performance in the conflict with Iran carried significant weight for regional stakeholders. Depending on how that performance was read, Gulf states could emerge from the conflict either with renewed confidence in the US-led security order, or with a growing inclination to diversify partnerships and seek hedging alternatives.
The conflict with Iran and its consequences have exposed real shortcomings in the US security umbrella for the region. A long-held diplomatic push to establish a US-led security framework, accompanied by the Abraham Accords, which normalised relations between Israel and certain Arab states including the UAE, was directly tested by the conflict. While air defences intercepted the majority of Iranian missiles and drones, the sheer scale and persistence of the attacks meant that damage was unavoidable: the UAE's largest natural gas processing facility, Habshan, was struck by debris from intercepted projectiles on multiple occasions, forcing repeated shutdowns. ADNOC Gas has indicated it expects to restore only 80% of capacity by the end of 2026, with full restoration not expected until 2027. This is without accounting for the still-unresolved diplomatic status of the conflict, marked by the stop-start ceasefire negotiations coming from the White House.
Despite the economic and geopolitical factors behind the UAE's exit largely pointing towards a multipolar hedging posture, some media outlets framed it as a 'Trump win', citing the US President's past characterisation of OPEC as a group that had been overcharging the world for oil. The exit does, however, leave the previous economic-security order for the region exposed. Other Gulf states and significant energy players may conclude that their interests are better served by setting independent production strategies, or by hedging across an increasingly multipolar landscape. It is worth noting that the ceasefire framework that brought a temporary halt to US-Iran exchanges was brokered by Pakistan, and that Beijing was a direct participant in that effort: Pakistan and China jointly put forward a five-point peace initiative in late March, and China subsequently expressed formal support for Pakistan's mediation role. This points to a growing Chinese presence in Near Eastern affairs, a region where Russian influence has notably receded following Assad's downfall and Moscow's continued focus on Ukraine.
On the other hand, the US push to curb OPEC's influence and increase overall production does benefit from this decision, meaning the UAE's exit cannot be read as a straightforwardly anti-US move. At the same time, leaving OPEC may improve the prospects of the petroyuan, as the UAE will no longer be bound by the group's informal dollar conventions. While OPEC members are not formally required to settle in USD, pricing oil in dollars has been standard practice since the 1974 arrangement between the US and Saudi Arabia. This, coupled with Tehran's reported decision to collect Hormuz transit fees in Chinese yuan and stablecoins rather than dollars, points to a potentially significant delinking between the world's reserve currency and its primary fuel source.
The UAE's exit from OPEC primarily signals that multipolarity in the Gulf is no longer a future prospect, but a present condition. The post-Cold War economic-security order, built on US primacy, dollar-denominated oil, and coordinated Gulf production, is visibly weakening, and the region's foremost stakeholders are acting accordingly. Rather than a pro-US or anti-US development, the UAE's exit is best read as a structural hedge: a tacit acknowledgment that no single power can guarantee the Gulf's security or prosperity anymore, and that the calculus of alignment is being rewritten in real time, across energy, economics, and geopolitics alike. The question is no longer whether multipolarity will reshape the Near East, but how fast, and at whose expense.