OPEC+ to raise oil output by 188k bpd as UAE’s exit indicates a looming supply deficit

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Since the exit of the United Arab Emirates (UAE) from the alliance, the Organisation of the Petroleum Exporting Countries’ (OPEC+) first meeting without the nation concluded with the decision to raise oil production by 188,000 barrels per day (bpd) for June. This suggests that despite a shift in internal dynamics, a consistent effort is being made to stabilise global oil markets. Tighter oil supplies could also push up energy and logistics costs, indirectly raising production expenses for aluminium smelters. 

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The increase is slightly lower than May’s output adjustment of 206,000 bpd, barring the UAE’s contribution after its official departure from the group on Tuesday, May 1, with its Energy Ministry citing production policy and capacity concerns as the cause for the UAE’s departure from the organisation.

The revised output plan will be implemented mainly by seven producers, viz., Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman, indicating a recalibrated alliance in the absence of one of its most influential members.

In an official statement, OPEC+ mentioned, “In their collective commitment to support oil market stability, the seven participating countries decided to implement a production adjustment of 188,000 barrels per day from the additional voluntary adjustments announced in April 2023.” 

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Geopolitical tensions continue to influence the supply side

Global oil supply remains under pressure amid ongoing geopolitical disruptions. Since the escalation of conflict involving Iran in late February, one of the world’s most critical energy transit routes, the Strait of Hormuz, has faced significant restrictions, tightening supply flows and fuelling market volatility.

However, markets received some relief from the recent diplomatic developments. Oil prices eased after Iran reportedly shared a revised peace proposal, thereby raising the possibility of alleviating tensions.

The US crude futures dropped 3 per cent, closing at USD 101.94 per barrel, while Brent crude declined almost 2 per cent to settle at USD 108.17. Despite the development, both benchmarks remain quite elevated, up about 78 per cent since the beginning of 2026.

UAE’s departure and balancing the market

The UAE’s exit has added another layer of uncertainty to OPEC+’s production strategy. As the cartel’s third-largest producer prior to its departure, the UAE has played a long-term pivotal role in shaping output decisions. As OPEC+ continues to adjust output levels to maintain market balance, the absence of the UAE would likely impact both production coordination, as well as market perception for the time being.

At the same time, the greater trajectory of oil prices would take shape in response to the contemporary geopolitical developments. Statements from global leaders, such as the US President Donald Trump, indicate that negotiations with Iran remain fluid, with both resolution and escalation still on the table.

The announcement by OPEC+ points to a careful but steady approach. It is aimed at maintaining market stability while navigating through a combined patch of supply constraints, political shifts, and evolving global demand. 

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