The United Arab Emirates (UAE) will leave the Organization of the Petroleum Exporting Countries (OPEC) on 1 May, Reuters reported on Tuesday. The move comes during an energy crisis linked to the Iran war, with reports of growing discord among Gulf nations.<\/p>\n
The report said the UAE has faced missile and drone attacks for weeks by Iran, which is also an OPEC member. It also said Iran\u2019s attacks on shipping in the Strait of Hormuz have constrained the UAE\u2019s ability to export oil, affecting a key part of its economy.<\/p>\n
UAE Energy Minister Suhail Al Mazrouei said the exit would have a minimum impact on oil prices and on OPEC and OPEC+. At the time of writing, West Texas Intermediate (WTI) was up 2.15% on the day at $97.00.<\/p>\n
We are now approaching the one-year mark since the United Arab Emirates left OPEC, a move prompted by attacks from Iran last year. The initial price spike to $97 a barrel, which we saw in April 2025, was driven by war fears that overshadowed the prospect of more supply. This underlying tension between geopolitical risk and unconstrained production continues to define the market.<\/p>\n
Since its departure, the UAE has aggressively increased output, adding an estimated 750,000 barrels per day to the market to maximize revenue. This is a significant move towards their stated capacity goal of 5 million barrels per day. This sustained increase in non-OPEC supply has created a persistent headwind for crude oil prices over the last several months.<\/p>\n
We expect implied volatility in crude options to surge in the coming weeks, especially with ongoing shipping disruptions in the Strait of Hormuz. Looking back, similar geopolitical flare-ups, like the beginning of the Ukraine conflict in 2022, saw volatility metrics double almost overnight. Traders should consider purchasing straddles or strangles to profit from a large price move in either direction.<\/p>\n
The conflict’s concentration in the Strait of Hormuz puts direct pressure on seaborne crude, which primarily affects Brent pricing. This has caused the Brent-WTI spread to widen significantly, recently hitting multi-year highs of over $9. We see opportunities in positioning for this spread to widen further if regional tensions escalate.<\/p>\n
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