With inputs coming from the US Congress, President Donald Trump said that he ended the war with Iran before the deadline. Under the 1973 law, the US President is given a 60-day window to conduct any military operation in an emergency without congressional approval, after which the President needs congressional approval to either continue the war or withdraw from it. The recent rhetoric by President Trump regarding ending the Iran war within 60 days of the presidential window may be just to bypass the congressional criticism and to get approval for the proposed defence budget, as the US navy continues to maintain its counterblockade in the Strait of Hormuz.
It is reported that the US has now begun exporting more than 5.5 million barrels of oil per day post-Hormuz Blockade, compared to around 3.5 million barrels per day in 2025. Given that oil prices in the global market are skyrocketing, the US, as Trump claims, is heavily benefiting from the war with Iran by diverting Persian Gulf oil supplies to the US. However, this claim does not get reflected in the American energy market, as fuel prices in the US continue to spike.
For the US, the UAE’s unexpected exit from OPEC may be a masterstroke to neutralise the Iran-imposed blockade in the Strait of Hormuz. As the control over this strait is the central point of discussion in the peace talks, the UAE’s exit from OPEC and its possible search for an alternative to bypass the Strait of Hormuz through a land-based pipeline to connect the Indian Ocean via Fujairah. The Emirati officials alleged that the OPEC’s quota system for oil production and exports was not pro-UAE. Its exit from this bloc will now allow the UAE to export oil as much as it wishes, depending on the global oil market demand and supply dynamics. As there is a race to become the driving force of growth in the Gulf, Saudi Arabia and the UAE have been competing with each other for years. Since Saudi Arabia dominates the block in terms of oil production capacity, it benefits the most from it. However, it is the UAE which dominates the region economically.
Although the UAE already has an existing investment project plan of $150 billion, which began to operate in early 2023, Abu Dhabi’s recent announcement to leave the block is obviously not an overnight decision; rather, it was a longstanding pending decision of the Emirates, which had been threatening to leave the block, as their demand for increasing the production quotas were ignored by the Saudi-led OPEC. Given that the UAE’s production capacity is significantly increased under this project plan to way beyond five million barrels per day, whereas its allocated OPEC production quota is still restricted to just 3.45 million barrels per day, the lump-sum loss of more than $50 billion annually. In this regard, the timing to leave this block has actually surprised the global oil market, provided that the US and Iran are in loggerheads with each other at the Strait of Hormuz, where two blockades are already in force, which has affected more than 20% global supply of crude oil passing through this strait.
{{/usCountry}}Although the UAE already has an existing investment project plan of $150 billion, which began to operate in early 2023, Abu Dhabi’s recent announcement to leave the block is obviously not an overnight decision; rather, it was a longstanding pending decision of the Emirates, which had been threatening to leave the block, as their demand for increasing the production quotas were ignored by the Saudi-led OPEC. Given that the UAE’s production capacity is significantly increased under this project plan to way beyond five million barrels per day, whereas its allocated OPEC production quota is still restricted to just 3.45 million barrels per day, the lump-sum loss of more than $50 billion annually. In this regard, the timing to leave this block has actually surprised the global oil market, provided that the US and Iran are in loggerheads with each other at the Strait of Hormuz, where two blockades are already in force, which has affected more than 20% global supply of crude oil passing through this strait.
{{/usCountry}}As the UAE became the main target of the Iranian retaliation during the war, it may have realised that its excessive dependence on crude oil is not sustainable for the actual growth of the Emirates, provided that the world is rapidly changing and shifting towards tech-based development. Given that the global economy is rapidly transitioning to an AI-driven advanced tech-based economy, the UAE, being one of the most desired financial capitals of the world, really requires huge capital revenue to make a transition to the modern tech-based mega projects and data centres and this, for the UAE, can be difficult to achieve if its oil production capacity, one of the most important sources of revenue generation, is not increased. Since the UAE’s economy is significantly hampered during the ongoing US-Iran war--in fact, the most affected economy in the Gulf- it, now, may have become a compulsion for the UAE to increase its oil production capacity, and this is what may have led to the announcement to leave this group ahead of its monthly meeting scheduled to take place on May 2.
UAE may believe this is the golden era for the oil market, when crude prices are at their very peak, which will eventually go down at some point. Therefore, before it goes down, the UAE may be planning to take advantage of the prevailing skyrocketing oil prices, but only if it significantly increases its production capacity, which was obviously not possible given its quota-based, cap-bound status in OPEC. UAE is also well aware of the situation that there is a higher possibility that the US-Iran war will continue to prevail, given that Trump has recently stated that counterblockade in the Strait of Hormuz is working better than bombing, as it is costing more than $ 500 million per day to the Iranian economy. In this context, the UAE is geographically located in such a way that its crude pipelines between Abu Dhabi (the largest reserve) and Fujairah (which opens into the Gulf of Oman) will bypass the blockades in the Strait of Hormuz.
While Abu Dhabi’s announcement to exit OPEC is likely to benefit the UAE economically, it is also highly likely to help the US geopolitically put pressure on Iran to accept the conditions it has put forward in the recent peace talks. As Trump has realised that it had undermined the Iranian capacity to retaliate, the Trump administration is so much frustrated with its decision to attack Iran, as this war has resulted in a deadlock, costing the US the most. The biggest dilemma of this war is that the US has no option to exit without reaching a conclusion, given its image of global hegemony, which would be at stake if it exited without one. Given that the UAE has a huge production capacity of 5 million barrels of oil per day, the increasing supply of oil through the Abu Dhabi-Fujairah pipelines will also help stabilise skyrocketing fuel prices, while also assisting the US in cutting off Iranian oil supply passing through the Strait of Hormuz. Now, here comes the twist. It would not be wrong to argue that the UAE’s announcement to exit OPEC has completely changed the ongoing strategic dialogue between the US and Iran, giving Trump an edge over the Iranian leadership. Hence, the US is now bound to negotiate with Iran on tougher terms and conditions in the upcoming peace talks, which may be expected to reach a conclusion soon.
As there is a mid-year election in the US, where higher fuel prices have become one of the hottest topics of criticism of the Trump administration, the gradually controlled and reduced prices of fuel may additionally help Trump in this election, for sure, which may convince Trump to continue the counterblockade in the Hormuz.
Given that India, being in dire need of energy, is facing an acute shortage of crude oil post the Strait of Hormuz blockade, the UAE’s exit from OPEC and the possible rapid supply of crude through the Abu Dhabi-Fujairah pipelines is expected to stabilise the global fuel prices and also fulfil India’s demand for energy, which earlier used to come through the Strait of Hormuz. India, being the UAE’s third-largest trading partner and the fourth-largest importer of crude oil, will most likely benefit from its strategic ties with the Emirates.
(The views expressed are personal)
This article is Sanjay Turi, doctoral candidate, Centre for West Asian Studies, School of International Studies, Jawaharlal Nehru University, New Delhi.