The UAE is leaving the OPEC oil cartel. Here's what that could mean for oil prices.

The 2020s have been a rough decade for OPEC; the global oil cartel has lost a lot of its power to manipulate supply to keep prices high. First, back in 2023, the U.S. — which is not a member — became the world’s largest crude oil producer. Then, this week, the United Arab Emirates announced that it’s leaving the group.

OPEC members have kept oil prices high by agreeing to limit how much oil they pump — and the UAE didn’t like its limit.

“Their economy runs on revenue from oil, and they want to increase that revenue,” said Morgan Bazilian, a public policy professor at the Colorado School of Mines.

The UAE isn’t very happy, Bazilian added, that it’s recently found itself under attack by Iran, a fellow OPEC member. In the long term, the country’s decision to leave could be good news for oil prices.

“Any time you increase supply in a normal context, that would lead to some level of price decline,” he said.

Lower prices might take a while to get here from the UAE because of the war in the Middle East.

“They rely on the Strait of Hormuz for exporting their oil,” noted Hugh Daigle, who teaches petroleum engineering at the University of Texas.

We won’t see a global boost in supply until that reopens, he said. And even if that happened tomorrow, there’s been a lot of damage to oil infrastructure, which Daigle said could take months to years for countries in the Middle East to fix.

“And as long as their export capacity is still constrained by that damage to infrastructure, we'll continue to see disruptions to supply similar to what we're seeing right now,” he said.

The UAE said it chose to leave now to minimize market disruption. Daigle said it managed that well, since the market is already disrupted by the war.