The United Arab Emirates has announced it will withdraw from OPEC and the larger OPEC+ alliance after nearly six decades of membership. Analysts fear it could herald the breakup of the world’s most powerful oil cartel and usher in a new wave of price volatility for British companies already struggling with stubborn energy costs.
The Gulf state, which joined the Organization of the Petroleum Exporting Countries in 1967, said the decision reflected its “long-term strategic and economic vision and evolving energy profile.” Abu Dhabi’s energy minister suggested that operating outside the cartel’s quota system would give the country more flexibility to pursue its own production ambitions, free from the collective discipline that has long characterized global crude markets.
For the UK’s small and medium-sized businesses, the immediate impact is anything but academic. Energy-intensive sectors, from manufacturing to logistics to hospitality, have struggled over the past three years with input costs that have fluctuated sharply due to geopolitical shocks and OPEC+ production decisions. A weakened cartel could mean cheaper oil in the short term as producers compete for market share, but it also raises the specter of wider price swings as the disciplinary mechanism that has tempered volatility in the past falters.
Saul Kavonic, head of energy research at MST Financial, didn’t mince his words, describing the move as “the beginning of the end for OPEC.” With the UAE’s departure, the cartel will lose around 15 percent of its production capacity and what Mr. Kavonic described as “one of its most compliant members.” The United Arab Emirates currently pumps about 2.9 million barrels per day, while Saudi Arabia pumps nine million.
“Saudi Arabia will struggle to hold the rest of OPEC together and will have to do virtually most of the heavy lifting on its own in terms of internal compliance and market management,” he warned, adding that other members may yet follow Abu Dhabi’s lead. He went further, characterizing the development as a “fundamental geopolitical reshaping of the Middle East and oil markets.”
As a result of the departure, OPEC has eleven members. Founded in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela, the cartel was created to coordinate production and stabilize member states’ revenues. The current list also includes Algeria, Equatorial Guinea, Gabon, Libya, Nigeria and the Republic of Congo.
For SME owners watching from the UK, the message is clear: hedging strategies, fixed-price energy contracts and supply chain stress testing are no longer the domain of FTSE 100 boardrooms. The post-OPEC era, if it does arrive, promises a more fragmented and unpredictable global energy market, and the companies that prepare now will be best equipped to weather what comes next.
