The global oil market is entering a volatile phase as Organization of the Petroleum Exporting Countries (OPEC) struggles to absorb the shock of a major member’s exit while geopolitical tensions escalate across the Middle East.
Fresh warnings from United Nations Conference on Trade and Development suggest the ongoing regional conflict is no longer just political, it is rapidly evolving into a wider economic threat with global consequences.
Oil prices reflected the tension, climbing above $110 per barrel amid stalled efforts to reopen the strategic Strait of Hormuz, a vital artery for global crude supply.
At the centre of the disruption is the surprise decision by the United Arab Emirates to withdraw from OPEC and the broader OPEC+ alliance from May 1, ending nearly 60 years of membership. The move removes one of the group’s most powerful producers, currently pumping about 2.9 million barrels per day.
The UAE now plans to ramp up production to 5 million barrels per day outside OPEC quotas—a shift analysts say could reshape global supply dynamics and weaken the cartel’s grip on prices.
Energy Minister Suhail Mohamed al-Mazrouei described the exit as a strategic decision aimed at long-term production growth. Notably, the decision was taken without consulting key allies such as Saudi Arabia, widely regarded as OPEC’s de facto leader.
The departure exposes deepening cracks within OPEC+, already under pressure from the ongoing conflict involving Iran and its regional spillovers.
Analysts warn that losing high-capacity Gulf producers could significantly weaken OPEC’s ability to stabilise oil markets. Previous exits, including that of Qatar, had already raised concerns over declining cohesion.
Data from the International Energy Agency shows OPEC+’s share of global oil output dropped to 44% in March, down from 48% in February, signalling a gradual erosion of influence.
Meanwhile, diplomatic efforts to end the crisis remain stalled. The White House declined to confirm whether Donald Trump would accept Iran’s latest proposals to reopen the Strait of Hormuz. The proposals reportedly delay discussions on Tehran’s nuclear programme—an issue Washington is unwilling to sideline.
Market optimism faded further after Trump cancelled a planned diplomatic trip involving envoys Steve Witkoff and Jared Kushner, deepening uncertainty around a potential resolution.
“Markets are not optimistic about reopening the Strait,” said Kathleen Brooks of XTB, citing Iran’s insistence on postponing nuclear negotiations.
Oil benchmarks surged in response. Brent crude rose 2.8% to $111.26 per barrel, while U.S. West Texas Intermediate climbed 3.4% to $99.62.
Energy analysts, including Jorge Leon of Rystad Energy, say the long-term outlook points to a structurally weaker OPEC and heightened price volatility.
Back home, Nigerian National Petroleum Corporation Limited reported a boost in output, with crude production reaching 1.71 million barrels per day—the highest level in five years.
The company’s one-year performance report also highlighted gains in gas infrastructure and refinery reforms, alongside increased production from its upstream arm, NNPC E&P Limited.
While Nigeria’s output rise offers some relief, the broader global picture remains uncertain, with supply disruptions and geopolitical risks continuing to dominate the outlook.
