UAE Quits OPEC Today. Here’s What I Think Happens to Oil Prices.
Today, May 1, 2026, the UAE officially left OPEC.
A lot of the articles and advice going around right now are pointing toward the petrodollar dying and why you should buy gold. I want to address that too — but first, let me focus on what I think is the more immediate story: what this actually means for oil prices, and whether you should be doing anything with your money right now.
First, Why Did UAE Leave?
The UAE has the capacity to pump 4.8 million barrels of oil per day. But OPEC only allowed them to produce around 3.2 million. That’s 1.6 million barrels per day of capacity sitting idle because of a quota agreement.
Meanwhile, other OPEC members like Iraq and Kazakhstan have been consistently cheating on their own quotas and pumping more than agreed. The UAE was playing by the rules while everyone else wasn’t. On top of that, fellow OPEC member Iran has been attacking UAE infrastructure with missiles and drones for weeks during the current war.
So the decision to leave makes sense. Why stay in a club that caps your production, can’t enforce its own rules, and includes a member actively bombing you?
The UAE is not the first to leave. Qatar left in 2019, Angola in 2024. But those were small producers. The UAE was OPEC’s third largest. This one actually matters.
What Happens to Oil Prices?
Here’s my view — and I want to separate the near term from the medium term because they point in opposite directions.
Right now, oil is expensive. Brent has been swinging between $110–$114 today alone. US gas prices hit $4.27 per gallon today — the highest since 2022. The Strait of Hormuz is effectively closed since early March, which means roughly 13–15 million barrels per day of global supply is blocked or severely disrupted, net of bypass pipeline capacity through the East-West and Habshan-Fujairah lines. The UAE leaving OPEC doesn’t change any of that today.
But once the war ends and Hormuz reopens, I think oil prices come down significantly. Here’s why.
The UAE can now pump freely at full capacity — no OPEC ceiling. Saudi Arabia then faces a difficult choice. If they keep production capped to hold prices up, they just lose market share to the UAE, the US, and everyone else. If they flood the market to compete, prices crash.
This actually happened before. Saudi Arabia spent the early 1980s cutting its own production to hold oil prices up while everyone else pumped freely. By 1985 they had cut from 10 million bpd down to 3.5 million and were losing market share fast. So in 1986 they gave up defending the price and opened the taps. Oil crashed from around $30 to under $10 a barrel within months.
I think a similar dynamic plays out post-war. The UAE pumping freely, US shale already ramping up, other OPEC members eyeing the exit — the cartel’s ability to hold the line on prices gets weaker by the day.
There’s also a longer term shift happening. Countries burned by the Hormuz closure are actively moving their oil purchases away from the Middle East. Indonesia, for example, is now buying 70% of its LPG from the US, up from 57% before the war. Europe has been ramping up imports from US refineries. That demand shift doesn’t fully reverse when the war ends.
Trump Wants Cheap Oil Too
This isn’t just market forces. There’s a political dimension.
Trump has been explicit that he wants lower oil prices. Cheaper energy means lower inflation, which is what he needs heading into midterms later this year. His “drill baby drill” policy is deliberately aimed at ramping US production. He’s also said Gulf states “exploit” US military protection by keeping prices high — essentially threatening to withdraw support unless they cooperate on prices.
The irony is that right now, Trump’s own war is doing the opposite. US gas prices are up roughly 44% since the war started in February. The Hormuz closure affects global oil prices regardless of where the US gets its crude from — oil is priced globally, not locally. So American drivers are paying $4.27 at the pump because of a war their own government started.
Which is exactly why I think the incentive to end this war quickly is enormous. Every extra week Hormuz stays closed is another week of $4.27 gas hurting ordinary Americans and hurting Trump’s approval numbers. Getting oil prices back down before midterms isn’t just good economics — it’s political survival.
Petrodollar Collapsing, So Buy Gold?
People are buying gold for a mix of reasons right now — the Iran war, inflation fears, dollar concerns, and the petrodollar narrative. The petrodollar collapse argument specifically leads some people to conclude the US will re-peg to gold. Personally, I don’t think the petrodollar is collapsing anytime soon — and even if it does, that’s not a reason to buy gold at today’s price.
Gold is at $4,630 per ounce today. It’s up 65% over the past year. The narrative driving it — war premium, dollar concerns, central bank buying — is already well known and well priced. You’re not getting ahead of anything at this entry point.
There’s also a contradiction worth noting. The same Iran war driving petrodollar collapse fears has actually strengthened the dollar — sitting near 98.7 on the dollar index right now, supported by safe-haven demand as investors flock to USD during uncertainty. Gold pays you nothing. The dollar, through US Treasuries, still pays 4-5%. As long as the world runs to dollars when things get scary, the petrodollar collapse thesis remains just that — a thesis.
What Does This Mean For My Money?
Markets have largely moved past the war — similar to how oil buyers are already diversifying away from Middle East dependency. The bigger question is what Q2 earnings and the jobs data look like when the lagged effects of high energy costs and AI displacement start showing up. That’s when I’d speculate a mid-year correction is possible — not because of the war itself, but because of what it left behind.
For what it’s worth, I think this is a standard earnings-driven correction, not a stagflation one. Q1 GDP came in at 2.0%, jobless claims just hit a 57-year low at 189,000, and current inflation is still largely energy-driven — which means it resolves when oil does. Stagflation is the tail risk if Hormuz stays closed into Q3 and energy prices feed structurally into core inflation. But that’s not the base case yet.
If that changes, I’ll reassess.
This post represents my personal views and investment thinking only. It is not financial advice. Please do your own research before making any investment decisions.