HSBC Expects Minimal Immediate Oil Market Disruption from UAE's OPEC+ Exit
HSBC Analysis of UAE's OPEC+ Departure and Oil Market Implications
April 28 (Reuters) - The United Arab Emirates' planned exit from OPEC and the wider OPEC+ alliance from May 2026 is expected to have limited immediate impact on oil markets but could weaken the group's supply discipline and price‑management ability over time, HSBC said in a research note on Tuesday.
UAE's Announcement and Immediate Market Impact
The UAE, one of OPEC's largest producers, said on Tuesday it would leave both OPEC and OPEC+, dealing a blow to the producers' group as the U.S.-Israeli war on Iran disrupts energy flows.
Short-Term Supply Constraints
In the near term, HSBC expects little change to global oil supply, as crude exports from the Gulf remain constrained by disruptions in the Strait of Hormuz, which has effectively been closed since late February.
Export Limitations and Pipeline Capacity
The bank said any increase in UAE output is capped while shipping access remains restricted. It added that the Abu Dhabi Crude Oil Pipeline, which allows exports to bypass Hormuz by carrying crude to the port of Fujairah, has capacity of up to about 1.8 million barrels per day and is likely already operating at or near full utilization.
Potential for Increased UAE Output Post-Hormuz Reopening
Once access through Hormuz is restored, the UAE will no longer be bound by OPEC+ production quotas and could gradually raise output, HSBC said. The bank estimates that Abu Dhabi National Oil Company could lift production to more than 4.5 million barrels per day, compared with an OPEC+ quota of about 3.4 million bpd for the May 2026 period.
Gradual Supply Increase and Market Effects
HSBC said any increase in supply is expected to be phased in over 12 to 18 months rather than delivered immediately, in line with ADNOC's stated intention to raise output gradually and according to demand and market conditions. Additional UAE barrels would help rebuild depleted global oil inventories after recent draws, the bank said.
Long-Term Implications for OPEC+ and Global Oil Markets
OPEC+ Cohesion and Compliance Risks
Over the longer term, HSBC said the departure of a core Gulf member could undermine OPEC+ cohesion and credibility, making supply management more difficult to enforce. The UAE's expanding production capacity and long‑term investment plans, including a $150 billion program through 2030, suggest an intention to monetise reserves with fewer output constraints.
Potential for Price Instability
The loss of UAE participation could also raise the risk of compliance slippage among remaining members. If collective discipline weakens, OPEC+ may struggle to manage prices during periods of softer demand or rising non‑OPEC supply, HSBC said.
(Reporting by Anmol Choubey in Bengaluru; Editing by David Gregorio)
