BT Explainer: OPEC and its role in regulating oil production, prices

The United Arab Emirates, one of OPEC+'s largest producers, announced it will leave the oil producers' alliance on May 1. The UAE is the fourth producer to leave OPEC in recent years and the largest by far. Angola left at the start of 2024 over disagreements on production levels. Ecuador exited in 2020, and Qatar in 2019.

The UAE's exit comes as OPEC and OPEC+ continue to play a central role in global oil supply, production policy, and pricing. This decision follows a decline in the group's market share in March amid the Iran war, during which Gulf producers, including the UAE, reduced output due to disrupted export routes.

"Today ​we hear that one of the countries, the United Arab Emirates, is leaving OPEC. What does this mean? It means that the ​country can produce as much oil as its production ​capacities allow and release it onto the market...If OPEC countries conduct their policies in an uncoordinated manner (after ​UAE exit) and ​produce as ⁠much oil as their production capacities allow and as much as they want, prices ​will go down accordingly," said Russian Finance Minister Anton Siluanov.

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WHAT IS OPEC AND OPEC+?

OPEC+ includes the Organisation of the Petroleum Exporting Countries and its allies, such as Russia. Last year, the group produced nearly half of the world's oil and oil liquids, with the UAE being the fourth largest producer within OPEC+.

OPEC was founded in 1960 by Iraq, Iran, Kuwait, Venezuela, and Saudi Arabia to coordinate petroleum policies and maintain fair and stable prices. The organisation now has 12 members, mainly from the Middle East, with the UAE joining in 1967.

Current OPEC members include Saudi Arabia, the UAE, Kuwait, Iraq, Iran, Algeria, Libya, Nigeria, Congo, Equatorial Guinea, Gabon, and Venezuela. Non-OPEC countries in OPEC+ include Russia, Azerbaijan, Kazakhstan, Bahrain, Brunei, Malaysia, Mexico, Oman, South Sudan, Sudan, and Brazil, which joined in early 2025.

OPEC OIL PRODUCTION

OPEC's share of global crude production has varied over time. In the 1970s, it produced more than half of global crude before non-OPEC sources like the North Sea emerged. Its share later ranged between 30 per cent and 40 per cent, but increased after forming the OPEC+ alliance with 10 non-members, including Russia, in 2016. This alliance boosted its market share to nearly 50 per cent in 2025, according to the International Energy Agency. However, the share dropped to about 44 per cent in March amid the Iran war.

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Before the US-Iran war began in late February, the UAE produced 3.3 million barrels per day and had capacity to produce between 4.5 million and 5 million barrels per day. 

Gulf OPEC+ crude production fell by nearly 8 million barrels per day in March compared to February, as Saudi Arabia, the UAE, Kuwait, and Iraq cut output.

OPEC’S OIL PRICING

OPEC+ says it adjusts production to balance markets, but critics accuse it of manipulating prices, a claim OPEC denies. During the 1973 Arab-Israeli War, Arab OPEC members imposed an oil embargo on the United States and other countries supporting Israel, causing fuel shortages and economic strain.

Former US President Donald Trump accused OPEC of inflating oil prices and linked US military support to the Gulf with oil pricing. However, Trump also played a role in convincing OPEC+ to cut output in 2020 during the COVID pandemic when oil prices fell sharply.