Reactions of countries to an energy deadlock

Reactions of countries to an energy deadlock

9 min read

Forecast: "Iran - interference of events and forecast of a broader spectrum for the near future" (published on March 6, 2026, link)

S. Dragun:

Basically, after the 20th of April 2026, many things in the world start to change. Previous trends may alter their course. In fact, at the very end of March 2026, a significant economic restructuring begins worldwide. But it appears as some kind of energy impasse that forces a review of the entire global economy structure. Of course, all countries will react to this...

In a series of March and April confirmations, we noted the fact that S. Dragun's forecast was realized: "... after the 20th of April 2026, many things in the world start to change. Previous trends may alter their course. In fact, at the very end of March 2026, a significant economic restructuring begins worldwide."

Today, we will confirm that «... it (the economic reform) looks like a certain energy dead end that forces a review of the entire structure of the world economy. Of course, all countries will react to this.»

And one of these countries that reacted to the energy dead end are the United Arab Emirates.

Ranking third in oil production in OPEC, the United Arab Emirates (UAE) are leaving the alliance. This decision is explained by the need to increase production, which is hindered by OPEC quotas, and may be a result of agreements with the United States. The move could push other OPEC members to leave the union and cause a period of low oil prices, posing risks to Russia, experts warn.

The United Arab Emirates (UAE), after nearly 60 years of membership in OPEC, has announced its exit from the organization effective May 1st. A similar decision was made regarding OPEC+ formed in 2016. The country cited sacrifices made during its time in the organization and stated that "it is time to focus efforts on what national interests and investor commitments dictate."

According to a statement from the state news agency WAM, the UAE will continue to act responsibly, gradually, and carefully, increasing production in the market in line with demand and market conditions. Energy Minister Suhail al-Mazroui explained that this is an opportune time to make this decision as it will not have a significant impact on the market and oil price due to the closed Strait of Hormuz.

In March, the UAE reduced production to nearly 90% compared to February, to 1.82 million barrels per day (bpd). Russia's production, not a member of OPEC but participating in the OPEC+ deal, stood at 9.16 million bpd.

Currently, participation in alliances significantly restricts the production of the United Arab Emirates (UAE). The country's oil production capacity exceeds 4.8 million barrels per day (b/d), and the UAE planned to expand it to 5 million b/d by 2027. At the same time, the OPEC quota in April and May was around 3.4 million b/d.

The UAE has repeatedly tried to challenge the allowed production level. The most intense conflicts during meetings arose with the coalition leader, Saudi Arabia. Due to disagreements, UAE representatives twice stated they might leave OPEC and OPEC+ in 2020 and 2023, but they did not take radical steps. Over the years, two countries have left the organization - Angola in 2023 and Qatar in 2019, but their production volumes are not comparable to those of the UAE.

The deputy head of the National Energy Security Fund, Alexey Gryach, calls the UAE's decision a demarche against OPEC partners. He believes this move could be linked to negotiations with the US for financial support in case the operation against Iran extends and triggers a deeper crisis. Expert Igor Yushkov from the Russian Government's Financial University also suggests that the UAE's exit could be one of the conditions for US aid. Washington is extremely concerned about reducing oil prices and, consequently, fuel costs on the US market, which would give President Donald Trump some breathing room and the opportunity to continue the conflict with Iran, Mr. Yushkov says.

Alexey Gryavich says that the current exit of the United Arab Emirates (UAE) from OPEC will have practically no impact on the global market due to the halt in supplies through the Strait of Hormuz and production cuts. However, once shipping resumes, the country will actively start increasing production, which will inevitably put pressure on quotes and crash prices, notes Mr. Gryavich. The UAE's exit from OPEC will weaken the organization's influence on the global market and potentially lead to an increase in the supply of Dubai-grade oil, analysts at the CCCI also believe.

How will the oil market change:

  • By 2027, the United Arab Emirates (UAE) plans to increase its oil production capacity to 5 million barrels per day. The country aims to maximize profits from oil sales before its reserves start to deplete. Some estimates suggest this could happen as early as 2040.
  • The UAE's exit from OPEC could lead to an increase in global oil supply outside of the cartel's quotas and potentially lower prices.
  • First Deputy Head of the Russian Federation's Committee on Economic Policy Nikolai Arefyev told RTVI that the UAE's exit from OPEC is in the interest of the United States, as there will be no single organization to counter them. "When there is no single organization, it is easy to convince, intimidate, or do something to influence oil prices for individual countries."
  • David Oxley, chief commodity economist at Capital Economics, believes that the United Arab Emirates' exit from OPEC could lead to a temporary drop in oil prices. However, it will trigger increased market volatility for the next several decades. He added that, while the UAE is small, the consequences could be significant if other member states leave the organization or countries like Russia and Saudi Arabia decide to increase their production.
  • Jorge Leon, analyst at consulting firm Rystad: "While the short-term impact may be minimal due to ongoing disruptions in the Strait of Hormuz, in the long term, it will lead to a structural weakening of OPEC. Outside the group, the UAE will have both incentives and opportunities to increase its production, raising broader questions about the sustainability of Saudi Arabia's role as the central stabilizing force in the market and potentially leading to greater instability in the oil market."
  • Ole Hansen, Saxo Bank: "In the short and medium term, the market should be able to absorb additional oil supplies from the UAE, given the depletion of global stocks and the need to rebuild reserves."

    • However, over time, this departure (UAE from OPEC) will raise a broader strategic question: if other producers start prioritizing market share over discipline in quotas, OPEC's ability to manage ordered markets through coordinated supply adjustments will be at risk.

     

     

    Western countries reacted significantly to the "economic impasse" caused by the blockage of the Strait of Hormuz.

    The US is proposing that other countries join a new international coalition to restore unimpeded passage of ships through the Strait of Hormuz, reports The Wall Street Journal, citing a State Department telegram.

    "This initiative, titled the 'Maritime Freedom Construct (MFC)', was outlined in a State Department internal telegram sent on Tuesday to embassies; it urges American diplomats to press foreign governments to join the initiative," the publication reports.

    Neither Europe nor the US is staying on the sidelines. On April 17, British Prime Minister Keir Starmer stated London and Paris' intention to lead a mission to ensure safe shipping through the Strait of Hormuz, with Rome and Berlin also expressing their willingness to contribute.

     

     

    Another indication that "…after the 20th of April 2026, a lot is changing in the world… and old trends may change course" are events related to the Malacca Strait in Indonesia.

    In the wake of the Hormuz blockade, the US may be tempted to block the Malacca Strait as well, to prevent energy resources from reaching China's shores.

    The US aims to control the Malacca Strait, but the positions of Asian countries through which it passes are diverse.

    Singapore and Indonesia tend to align with the US. Specifically, Washington is preparing a new military agreement with Indonesia for the control of US aviation in Indonesian airspace and through the strait.

    Malaysia, on the other hand, defends its negotiations with Iran.

    The Malacca Strait serves as the primary channel for Asia's production and energy supply chains. Around 82,000 ships, or approximately 40% of global trade, pass through it annually, including most of the oil supplies from the Middle East to China, Japan, and South Korea.

    Moreover, the Malacca Strait is more than five times longer than the Strait of Hormuz, offering vast opportunities for control. Indeed, it is in this very area that Iranian barrels are transferred to other ships, bound for the Chinese market.

    Notably, the Malacca Strait is a very troubled region. Last year, it witnessed a surge in piracy - 72 incidents of armed robbery. Formally, Indonesia, Malaysia, Singapore, and Thailand patrol this area, with Thailand joining the fight against piracy through the Malacca Strait Patrol (MSP) mechanism.

    However, the straits hold immense significance for other nations, as over 80% of China's oil imports pass through them. Thus, the US maintains its military presence here through allies-Japan and Australia. Beijing is enhancing military cooperation with Malaysia and conducting surveillance activities, including seabed mapping in areas near the straits.

    India also has direct strategic and economic interests: the Andaman and Nicobar Islands (part of India) are just a hundred kilometers from the western entrance to the straits. India has been seeking official inclusion in the MSP mechanism for over ten years.

    As S. Dragun predicts:

     

    …This («reactions of countries», «energy deadlock») may happen simultaneously, but the process has taken such a turn that it's impossible to continue in this direction. These are signs of a crisis. Previous interaction structures will be destroyed, though more in the form of a pause…

    (continuation of the topic follows)

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