UAE decides to exit Opec as US-Iran war continues to affect energy flow

Amid the ongoing West Asia war and the naval blockade of the Strait of Hormuz, the United Arab Emirates (UAE) has exited from the Organization of the Petroleum Exporting Countries (Opec), signalling a break from coordinated oil policy.

The decision comes against the backdrop of the ongoing United States (US)- Israel joint strikes on Iran. Israel has relied on a steady flow of advanced weaponry backed by the US to sustain its offensive and defensive operations. These systems ranging from precision-guided munitions to air defence interceptors have played a critical role in countering Iranian missiles and drones, changing the battlefield equations across the Gulf.

With the Strait of Hormuz blocked as a fallout of the conflict, the world is facing an unprecedented energy supply shock. Nearly a fifth of global oil supplies pass through the Strait of Hormuz.

What is Opec?

Opec is a coalition of major oil-producing nations formed in 1960 to coordinate petroleum policies and stabilise global oil markets by managing production levels – either by increasing supply to cool prices or cutting output to support them. It plays a central role in influencing crude oil prices worldwide.

Its core members include countries from West Asia, Africa and Latin America, such as Saudi Arabia, Iran, Iraq, Kuwait, United Arab Emirates, along with Venezuela, Nigeria and Algeria, among others. It accounts for approximately 70-80 per cent share of global oil reserves, which allows the group to exert considerable influence on energy markets.

The move is aimed at asserting the country’s position as an independent regional actor, allowing it to determine how and when it sells its oil and gas, said Karen Young of Columbia University’s Center on Global Energy Policy, as quoted by Associated Press.

“This exit of Opec fits into the UAE need for flexibility with key energy consumers as well, including a future relationship with China and a more competitive relationship with Saudi Arabia,” she said.

However, the decision is unlikely to bring immediate changes to export capacity. The UAE’s only pipeline bypassing the Strait of Hormuz, linking to the port of Fujairah on the Gulf of Oman, is already operating at full capacity, she noted.

While Emirati officials have framed the move as an economic necessity aimed at ramping up oil production and capturing market share, it also reflects a broader strategic recalibration amid the war. The UAE appears increasingly unwilling to be constrained by Saudi-led production quotas, at a time when energy markets are being disrupted by war.

Israel sends Iron Dome to the UAE

Israeli Prime Minister Benjamin Netanyahu has directed the Israel Defense Forces to deploy an Iron Dome battery, along with interceptors and a team of operators in the UAE following a conversation with UAE President Mohammed bin Zayed Al Nahyan, according to Israeli officials as cited by Axios.

This marked the first instance of Israel transferring an Iron Dome system to another country, making the United Arab Emirates the first nation outside Israel and the US to host and operationally use it. The system was subsequently used to intercept dozens of incoming Iranian missiles.