OPEC Just Lost the UAE and Your Petrol Pump Will Feel It Eventually

The United Arab Emirates, OPEC’s third-largest exporter and one of the Gulf’s most strategically important producers, has announced it is leaving the Organisation of the Petroleum Exporting Countries to go it alone. According to reporting by the BBC, one global analyst has called it “the beginning of the end of OPEC”. Another, Charles-Henry Monchau, chief investment officer at Swiss private bank Syz Group, said outright that this is “the end of OPEC as we knew it”, noting that the group has survived wars, revolutions and country-level collapses, but “what it has never really survived is the loss of a founding-era major producer.”

It’s a big call, and a story most Malaysians might be tempted to scroll past. But OPEC’s decisions ripple through global crude prices, and global crude prices show up in your petrol pump, your grocery bill, your electricity tariff, and the government’s subsidy budget. Especially right now, with the Iran war already disrupting supply, this is the kind of structural shift that quietly reshapes the cost of living for the next decade.

What is OPEC, anyway?

For those who aren’t in the know, OPEC was founded in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela, five countries that decided they were better off coordinating production than competing each other into the ground.

Today, the group also includes Algeria, Equatorial Guinea, Gabon, Libya, Nigeria and the Republic of the Congo. In 2016, when oil prices were on the floor, OPEC teamed up with 10 other producers, including Russia, to form the wider OPEC+ alliance.

Think of OPEC as a club whose members agree, in principle, to turn the global oil tap up or down together. When prices look too low, they pump less. When prices look too high, they pump more. That’s the theory, anyway.

What does OPEC actually do?

OPEC’s whole purpose is to influence global oil prices by managing how much its members supply.

As mentioned by the BBC, the cartel’s most famous moment was October 1973, when Arab oil producers placed an embargo on countries, led by the US, that supported Israel during the Yom Kippur war, alongside a coordinated production cut. Oil prices more than doubled, fuel rationing kicked in, and the world got its first crash course in just how dependent modern economies are on cheap crude. A second shock followed during the 1979 Iranian Revolution.

In its first meeting since the UAE walked out, OPEC+ said members would raise production by 188,000 barrels per day from June, framing it as a move to “support oil market stability”. The statement made no mention of the UAE. 

But here’s the catch, OPEC’s actual power has always been weaker than it looks on paper. As Maurizio Carulli, global energy analyst at Quilter Cheviot, has mentioned that some members pump more than agreed because they want a bigger market share, others pump less because of technical issues. In other words, OPEC’s grip on prices was already loosening before the UAE made its move.

UAE: The missing heavyweight

This is where things get serious. The UAE was the world’s third-biggest oil exporter in 2025, behind only Saudi Arabia and Iraq. Losing a member that big is a structural blow. It’s not like losing a small producer no one really tracked.

That said, the short-term impact may be muted. The Strait of Hormuz, the waterway through which about a fifth of the world’s oil and LNG normally flows, has been effectively closed for eight weeks because of the Iran war. While the strait remains blocked, Carulli notes that the UAE’s departure will have little to no impact on exports in the short-term. There’s only so much oil anyone in the Gulf can actually move right now.

How much oil are we talking about?

Plenty. According to OPEC’s own data, the UAE produced 3.1 million barrels of oil a day in 2025, making it OPEC’s fourth-largest producer. For comparison, Saudi Arabia, OPEC’s de facto leader, produced more than 9 million barrels per day.

Once unbound from OPEC quotas, experts estimate the UAE could ramp up production by around one million additional barrels per day. Just days after announcing its exit, state-owned oil company ADNOC unveiled a US$55 billion growth push for 2026 to 2028.

A freed-up UAE pumping at full tilt could meaningfully push global oil supply higher over the medium term, which, all else equal, is bearish for prices.

OPEC’s influence is shrinking

This is the bigger trend behind the UAE story. OPEC simply matters less than it used to.

In 2025, OPEC produced 36.7% of global crude oil, down from more than half (52.5%) in 1973. Non-OPEC producers like the US, Canada and Brazil have eaten into that share. The US has been the world’s largest oil producer since 2018, pumping 13.6 million barrels a day in 2025. Russia, an OPEC+ member, produced 9.1 million barrels a day, making it the second-largest producer globally.

Carulli notes that influence over oil prices has somewhat shifted to the US in recent weeks, simply because Gulf OPEC members can’t export through a closed Strait of Hormuz. According to the BBC, Monchau’s read is even sharper: “OPEC will continue, but with materially less ability to set prices.”

If he’s right, the era of a small cartel reliably moving the global oil price is winding down.

So what does this mean for the average Malaysian?

A weakened OPEC and a more fragmented oil market changes a few things in your daily life, sometimes helpfully, sometimes not.

1. Petrol prices could become more volatile. A more disciplined OPEC tended to smooth out global oil prices. With its grip loosening, expect bigger swings. RON95 stays subsidised at RM1.99 for now, but RON97 and diesel, which floats with the global market, will feel it more directly.
2. The government’s subsidy bill will keep being a story. Malaysia imports a chunk of its crude for refining, so global prices feed straight into subsidy costs. A more chaotic market makes forecasting harder for a Treasury that’s already projecting a 2026 subsidy bill many times over budget.
3. Long-term, more supply could be a tailwind. If the UAE and others ramp up output once geopolitics calms, oil prices could ease, good news for inflation, transport, and government finances. However, this is the “medium-term”. The short term is still dominated by the Iran war.
4. Investors should pay attention. If you hold oil and gas counters on Bursa, energy-focused unit trusts, or PRS funds with commodity exposure, a weaker OPEC means a potentially lower long-term price floor for crude, with knock-on effects for upstream margins. Not financial advice, but a reason to check your portfolio.
5. EV and renewables math could shift. Cheaper oil makes the short-term cost-saving case for EVs and renewables a little harder to sell, even if the long-term direction doesn’t change.

The Move

You can’t control OPEC, but you can control how exposed you are. Three small things this month:

• Review your monthly fuel budget. If you’ve been assuming RON97 stays steady, add a 10-15% buffer.
• Check your investment exposure. Pull up your unit trust or PRS statements and see what sits in energy-heavy funds.
• Watch subsidy announcements. With the Treasury under pressure, tweaks to RON95 eligibility and Budi Madani thresholds become more likely.

The OPEC story is a slow-burn shift, but the centre of gravity in global oil is moving, and Malaysian wallets will feel the after effects one way or another.