EP.3 – The Global High Tea Series | UAE’S Exit from OPEC and its Impact on Global Oil Prices and India

West Asia Energy
EP.2 – The Global High Tea Series | Energy Disruptions in West Asia & Their Economic Implications for India
May 12, 2026
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EP.3 – The Global High Tea Series | UAE’S Exit from OPEC and its Impact on Global Oil Prices and India

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Event Start Date:
June 9, 2026		Event End Date:
June 9, 2026		Event Venue:
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EP.3 – The Global High Tea Series | UAE’S Exit from OPEC and its Impact on Global Oil Prices and India

Introduction

The decision by the United Arab Emirates to exit OPEC and OPEC+ as of May 2026 marks a major turning point in global energy politics. As one of OPEC’s largest producers with significant spare capacity, the UAE’s departure weakens the group’s ability to regulate global oil supply and stabilise prices. The move reflects Abu Dhabi’s growing ambition to expand oil production through ADNOC, which aims to raise output to 5 million barrels per day by 2027, while also signalling broader geopolitical realignments in the Gulf region.

For India, the development presents both opportunities and challenges. Increased UAE oil production could help moderate global crude prices, benefiting India by reducing import costs, inflationary pressures, and the current account deficit. The strengthening of India-UAE energy ties, supported by the CEPA agreement and ADNOC’s role in India’s strategic petroleum reserves, could further deepen bilateral cooperation. Additionally, the Habshan-Fujairah pipeline offers India a more secure supply route that bypasses the Strait of Hormuz amid regional tensions. However, the weakening of OPEC may also lead to greater volatility in oil markets and raise the possibility of price competition within the Gulf, creating uncertainty for energy-importing countries like India.

Key Takeaways

  1. UAE’s Exit Signals a Well-Supplied Global Oil Market

UAE’s departure from OPEC is primarily an indicator that the global oil market is heading toward a state of abundant supply. Despite ongoing geopolitical conflicts, prices have not approached historical peaks, suggesting that structural oversupply conditions are increasingly becoming the norm rather than the exception.

  1. OPEC’s Pricing Power Has Been Significantly Eroded

The rise of US shale oil production over the past 15–20 years has fundamentally diminished OPEC’s ability to control global oil prices. As a result, oil prices have remained in a moderate range since 2014, a development that has been consistently beneficial for import-dependent economies like India.

  1. The Cost of Spare Capacity Made OPEC Membership Increasingly Unviable for UAE

The UAE maintained roughly 1.5 million barrels per day of unused production capacity, representing tens of billions of dollars in idle investment built up over decades. With the returns from OPEC membership diminishing, continuing to bear this cost no longer made economic sense, making the exit a rational financial decision.

  1. UAE’s Exit Reflects Fractures Within the GCC’s Political Unity

The departure is not purely economic. Diplomatic tensions between Gulf states, including the Saudi-Qatar break in 2017 and more recent Saudi-UAE confrontations over Yemen, indicate that the GCC bloc no longer operates with the cohesion it once had. The UAE’s move is as much a geopolitical signal as it is an economic one.

  1. A “Price War” Framing is Misleading; “Demand Security” is the Better Lens

Rather than triggering a price war, the UAE’s increased production should be understood through the lens of demand security. As a major producer, the UAE seeks long-term, reliable buyers. India,  as one of the very few large economies with growing oil consumption, is uniquely positioned to provide that assurance, making deeper India-UAE energy partnerships mutually beneficial.

  1. India Stands to Benefit Significantly as a Consumer

India imports approximately 4.5–5 million barrels per day and is projected to reach 10 million barrels per day by 2050. A well-supplied oil market with stable or lower prices directly reduces inflationary pressure, supports consumer spending, and eases the fiscal burden on the government, all critical for sustaining high economic growth.

  1. India Must Transition from Passive Buyer to Active Upstream Investor

Despite being one of the world’s largest oil importers, India has largely stepped back from investing in overseas oil fields over the past decade. The expert strongly argued that India must resume upstream investments,  particularly in stable, resource-rich countries like the UAE, to hedge against supply disruptions and price volatility.

  1. A Two-Way Investment Architecture Between India and the UAE is Emerging

The webinar outlined a compelling bilateral investment model: UAE investing in India’s downstream refining and fuel retail sectors (securing demand), while India acquires equity stakes in UAE upstream oil fields through entities like ADNOC (securing supply). A potential swap involving stakes in Indian PSU refiners like HPCL or BPCL was cited as one possible mechanism.

  1. OPEC is Essentially a Relic of a Eurocentric, Peak-Oil Era

OPEC was built around the assumptions of a Western-dominated oil demand structure and fears of global oil scarcity. Both assumptions have been overtaken by events. Asian economies now drive global oil demand, and peak oil fears have been discredited by shale and other unconventional sources. The UAE’s exit is a symptom of this structural obsolescence.

  1. Oil Remains Indispensable for the Foreseeable Future

Renewable energy, while growing, cannot fully replace oil in the near term due to intermittency, mineral supply chain constraints, and oil’s irreplaceable role in transportation, fertilisers, plastics, and petrochemicals. This ensures that producers like the UAE and Saudi Arabia will remain geopolitically and economically significant for decades and that India’s oil import dependency is a long-term structural reality that must be managed strategically.

Speakers

Mr Amit Bhandari

Senior Fellow, Energy, Investment, Connectivity
Gateway House: Indian Council of Global Relations
Amit has nearly two decades of experience as a public policy researcher, an entrepreneur and a financial analyst. He is the author of “India and the Changing Geopolitics of Oil (Routledge, 2021), a book that looks at India’s changing role in the global oil trade and how it can use this heft to secure energy supplies. He is also the lead author of the report “Chinese Investments in India” (Feb 2020), which looked at China’s penetration of India’s startup ecosystem. He is the founder of tezbid.com, a numismatic portal.
Amit started his career with the Economic Times, where he tracked the energy sector. He was a part of the start-up team of ET Now, the business news channel. Amit was responsible for setting up India Reality Research, a new research outfit within CLSA India, a stockbroking firm. He has also worked with Deccan Chronicle Group as the business editor for their general dailies.
He holds a Master’s in Business Administration from IIM- Ahmedabad and a Bachelor’s degree in Technology from IIT-BHU.

Moderator

Mr Gazi Hassan

Research Scholar of International Politics at CPPR 

Gazi Hassan is a Research Scholar of International Politics. He has an MPhil in International Studies from MMAJ Academy of International Studies in Jamia Millia Islamia University, New Delhi. Was previously associated as Senior Research Associate with CPPR- Centre for Strategic Studies. Mr Hassan’s research focuses on the Indo-Pacific, particularly exploring geopolitical dynamics, developments related to trade, terrorism, the role of various actors and including the security dynamics of the region. He has also worked as a researcher at the Vivekananda International Foundation, New Delhi and has been contributing articles to SADF (Brussels) and various online platforms like Foreign Policy News (US), The Quint (New Delhi), among many others.

 

 

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