OPEC+ makes its first statement after UAE's exit: A symbolic increase of 188,000 barrels per day may occur in June.

After the UAE unexpectedly withdrew from OPEC+, the alliance made its first public statement. Against the backdrop of blocked passage through the Strait of Hormuz and continued pressure on global crude oil supply, OPEC+ is attempting to signal "business as usual" to the outside world through a production increase decision that is more symbolic than substantive.

On April 30, according to Bloomberg citing three sources, OPEC+ is expected to reach an agreement on June production targets during a video conference this Sunday. Two representatives said that the seven major member countries led by Saudi Arabia and Russia are expected to raise their production targets by 188,000 barrels per day—although the blockade of the Strait of Hormuz means this increase is essentially impossible to implement.

Russian Deputy Prime Minister Alexander Novak attempted to calm the market. According to media reports, Novak dismissed concerns that the UAE's withdrawal would trigger a price war, saying that with Middle East conflicts restricting oil-producing countries from releasing additional supply, a price war is out of the question.

However, analysts warn that once the Strait of Hormuz reopens, the UAE’s potential to freely expand production outside of quota constraints will create substantial downward pressure on medium-term oil prices.

Symbolic Production Increase: Continuing the Recovery Process on Paper

According to Bloomberg, the proposed increase of 188,000 barrels per day is part of OPEC+'s ongoing plan—the alliance has been gradually restoring production voluntarily cut back years ago, and this plan was initiated before the outbreak of conflicts in the Middle East.

However, there are currently almost no conditions for this production target to be executed. The Iran war has effectively closed the Strait of Hormuz, forcing exporters in the Persian Gulf region to significantly reduce output, and the new quota cannot be translated into actual exports.

Sources pointed out that at this stage, raising quotas is mainly about preparing ahead—once the conflict ends and production resumes, pre-set targets will provide a basis for restoring output.

Russian Deputy Prime Minister: Market Shortage, No Basis for Price War

Responding to concerns that the UAE’s withdrawal might spark a scramble among members for market share, Russian Deputy Prime Minister Alexander Novak gave a clear reply.

According to media reports, Novak said: “With the current supply shortage in the market, where could a price war come from?” He further noted that the Strait of Hormuz is nearly closed, “A large amount of crude oil is simply unable to reach the market, and demand far exceeds supply.”

Novak also stated that Russia and Saudi Arabia have not yet discussed the UAE's withdrawal decision, and reaffirmed that Moscow has no plans to leave OPEC+. He stressed that the alliance is “very adept at mitigating oil market risks” during crises, and its cooperative mechanisms help maintain strategic coordination and regular communication among member countries.

Analysts Warn: Medium-Term Risks Should Not Be Ignored

Although the threat of a price war is temporarily constrained by war for now, analysts warn that once geopolitical tensions ease, the medium-term impact of the UAE's withdrawal from OPEC+ will gradually emerge.

UAE officials have clearly signaled plans to expand production. Unlike OPEC+ member countries that are bound by quotas, the post-withdrawal UAE can freely decide its production pace, meaning that once the Strait of Hormuz reopens, its output increase will directly inject new supply into the global market.

JPMorgan analyst Ian Mitchell wrote in this week's report: “The UAE announces withdrawal from OPEC. In the short term, oil prices will remain dominated by the situation in Hormuz, but this event likely means medium-term oil prices will be lower than previously expected, despite the many variables.” UBS analyst Henri Patricot conveyed a similar view to clients: “The immediate impact is limited, but there is medium-term downside risk for oil prices.”

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