Oil prices rose sharply on Tuesday despite the United Arab Emirates saying it would leave OPEC and OPEC+ next month, ending nearly 60 years inside the producer group during one of the most tense periods for global energy markets. Brent crude traded near $111 per barrel after reaching a one-month high, while West Texas Intermediate moved around $100.15. The gains extended a seven-day rally as traders assessed supply risks from the Middle East conflict, restricted shipping through the Strait of Hormuz, and stalled peace talks involving the United States and Iran. The UAE’s decision marks a major change for OPEC, which has long relied on coordinated production policy among leading oil exporters. The country has been one of the group’s largest producers and has played an important role in OPEC+ supply decisions alongside Saudi Arabia, Russia, and other members. UAE Exit Changes OPEC Supply Balance UAE Energy Minister Suhail Mohamed al-Mazrouei said the decision followed a review of the country’s current and future production policy. He said the move was a national policy decision and was not raised with other countries before being made. The UAE is expected to leave both OPEC and OPEC+ on May 1. Its departure would allow the country to operate outside production quotas and use more of its available capacity when market conditions permit. The UAE has capacity to produce close to 5 million barrels per day, while OPEC limits had kept output lower. Any future increase would depend heavily on shipping access, as Gulf exports remain constrained by the disruption around the Strait of Hormuz. OPEC+ controlled nearly half of global oil output before the war, but its share has fallen as regional production and export routes face pressure. The International Energy Agency said OPEC+ output share dropped to 44% in March from about 48% in February. Strait of Hormuz Closure Drives Oil Rally The oil-price surge has been driven largely by the closure of the Strait of Hormuz, a narrow waterway between Iran and Oman that normally handles about one-fifth of global oil flows. The route is also vital for liquefied natural gas shipments. Shipping through the strait has been heavily restricted due to the conflict involving the United States and Iran. Gulf producers have struggled to move exports, adding pressure to crude supply and lifting benchmark prices. The International Energy Agency has reported a supply loss of more than 10 million barrels per day in March, making the disruption one of the largest recorded in oil markets. That sharp decline has pushed traders to price in tighter availability of crude. Brent crude rose more than 2% during the session, while WTI gained more than 3% and moved above the $100 level. Brent briefly traded above $112 before easing back near $111 after the UAE announcement trimmed part of the rally. Iran Talks Keep Markets on Edge Oil traders are also watching efforts to reopen the Strait of Hormuz through a possible peace proposal from Iran. The proposal reportedly offers to reopen the waterway and end the conflict, but delays talks on Iran’s nuclear programme and missile activity. As we reported, U.S. officials have not accepted the proposal in its current form. President Donald Trump has said any agreement must prevent Iran from obtaining a nuclear weapon, while senior officials have raised questions about the terms. Trump said Iran had informed the United States that it wanted the Strait reopened as soon as possible while facing internal pressure. The claim drew attention from energy markets because any reopening could ease supply pressure. The UAE’s OPEC exit adds another layer to the market outlook. In the short term, restricted shipping may limit the effect of any extra UAE production. Over time, operating outside OPEC could allow the country to expand market share if export routes return to normal.
