Opec cracks as UAE exits; near-term oil surge, long-term boost for India

The United Arab Emirates has announced its exit from Organization of the Petroleum Exporting Countries, marking the end of a decades-long alignment within the influential oil cartel.

According to a sector update by ICICI Securities, the move could have far-reaching implications for global oil markets, potentially weakening OPEC’s ability to manage supply in a coordinated manner.

The report describes the UAE’s departure as a structural shift that could disrupt a 65-year-old framework of collective production strategy. While the immediate impact may be muted due to ongoing disruptions in the Strait of Hormuz, the long-term outlook points toward increased oil supply.

More from Business

The UAE has already built significant spare production capacity, which could enter global markets once logistical constraints ease. This, analysts say, may gradually soften crude prices.

However, in the near term, oil markets are expected to remain volatile. ICICI Securities estimates that crude prices could stay elevated around $85 per barrel over the next 9–12 months, driven by supply bottlenecks and geopolitical uncertainties.

The development also raises questions about the future cohesion of OPEC. The report notes that other member nations could reassess the value of remaining within the cartel, especially amid declining revenues and shifting geopolitical priorities.

For India, the implications are mixed. Elevated crude prices in the short term could keep import costs high, putting pressure on inflation and fiscal balances. But over the longer term, softer oil prices could benefit downstream oil marketing companies such as Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum.

The report concludes that the UAE’s exit could mark a turning point in global energy coordination, reshaping supply strategies, pricing dynamics, and the balance of power in oil markets.