Implications and potential for PHL of the UAE’s exit from OPEC

Last Tuesday, April 28, the United Arab Emirates (UAE) announced that they will be out of the Organization of the Petroleum Exporting Countries (OPEC) and OPEC+ starting May 1, giving just a few days’ notice.

OPEC has 12 member-countries led by Saudi Arabia. There are 10 non-OPEC countries, led by Russia, who are part of the Declaration of Cooperation (DoC) with OPEC.  The combined crude oil production of OPEC and non-OPEC nations (22 countries) was 41.9 million barrels per day (mbpd) in 2025, 42.8 mbpd in February this year, declining to 35.1 mbpd in March.

Within OPEC, the UAE is the 4^th largest crude oil producer after Saudi Arabia, Iraq, and Iran. The war and the choking of the Strait of Hormuz have adversely affected Saudi Arabia, Iraq, the UAE, and Kuwait — their combined reduction in output last March over February was 7.77 mbpd (see the table).

Our neighbors Malaysia and Brunei are among the non-OPEC nations which are part of the DoC, but their output is not significant enough to expand our oil supply security. Nonetheless they give us a lesson — we need to engage in more domestic oil-gas exploration and development to expand not only our gasoline-diesel supply stability, but to also expand the naptha and other feedstock for our domestic oil refinery and future petrochemical industry revival.

Among the reasons given by the UAE on why they will exit the OPEC: “The stability of the global energy system depends on the availability of flexible, reliable and affordable supplies, and the UAE has invested to meet the changing demands efficiently and responsibly, prioritizing supply stability, cost, and sustainability.”

I think the UAE is unhappy being an obedient follower of oil supply policies made by Saudi Arabia over the decades. The petrodollar scheme between the Middle East oil exporters and the US — that all oil purchases by countries should be paid for in US dollars, in return the US will provide military security for these oil exporters — has proven to be weak. Since the war broke out on Feb. 28, UAE territory has been breached many times by Iranian missiles and drones. The US security guaranty was somehow a failure.

I asked Arnel Santos, the COO of MGEN Thermal, if my hypothesis — that the UAE’s exit will be good in terms of more world oil supply and pricing competition — makes sense. He agreed. Mr. Santos was a Shell petrochemical executive for many years and hence a real expert in oil-gas economics.

“The impact becomes material after the conflict,” he said. “Once flows normalize, the UAE is no longer bound by quotas and will move to monetize its capacity. This shift changes how the system operates. The system transitions to more independent production behavior with reduced coordinated supply management. OPEC remains in place with a weakened ability to enforce production discipline.

“I assess this decision as driven by strategic and economic objectives rather than a response to Iranian retaliation,” he explained. “Exposure remains unchanged given geography and infrastructure. The decision reflects a move to gain production flexibility, assert independence from Saudi-led coordination, and position for market share in the next cycle.”

The Philippines has three potential benefits from the UAE in general, and its exit from OPEC in particular.

1. We can expect more oil, gas, petrochem, and fertilizer supply stability once the Middle East conflict ends. We have a Philippines-UAE Comprehensive Economic Partnership Agreement (CEPA) that was signed only this year. It is a good setup so that UAE can prioritize the Philippines in energy supply.

2. The UAE serves as a model for large-scale nuclear energy development. The UAE has invested a lot in nuclear energy — they had no nuclear power generation until 2019, then started producing 1.6 terawatt-hours (TWh) in 2020, 10.5 TWh in 2021, 20.1 TWh in 2022, 34.4 TWh in 2023, and 40.6 TWh in 2024 (Stat. Review of World Energy 2025). It could be 42+ TWh in 2025, constituting up to 25% of total power generation in the UAE.

3. The UAE has six of the top 30 richest sovereign wealth funds (SWF) in the world, with combined assets of $2.4 trillion, which is nearly 1,100 times larger than the assets of our Maharlika Investment Corp. (MIC) at $2.2 billion. MIC can partner with any of those six rich SWFs for more energy, infrastructure, and industrialization modernization of the country.

Executive Secretary Ralph G. Recto, Energy Secretary Sharon S. Garin, Foreign Affairs Secretary Ma. Theresa P. Lazaro, and other Cabinet officials will have additional challenges working with the UAE once the current Middle East conflict ends.

Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation.

minimalgovernment@gmail.com