The UAE quits OPEC, triggering what experts say could be a full-scale collapse of the wagon

The price of fuel will drop as the Organization of Petroleum Exporting Countries (OPEC) looks set to collapse, say experts. OPEC has long kept crude oil prices higher than they otherwise would have been. If this passes, it will be a major victory for the Trump administration, resetting energy markets around the world.

The news of the possible end of the oil cart also reassures President Donald Trump, who once said that OPEC is “destroying the whole world.” The president has long led a campaign to pressure OPEC, which has a glut of crude oil that can easily be dumped. But the agency limits the number of barrels of oil each country can pump each day. That keeps gasoline prices high across the US and the rest of the world.

Phil Flynn, senior market analyst at The PRICE Futures Group and a contributor to FOX Business said, “In the long run, the company’s breakup should result in a drop in the price of fuel. With the demand of many players, the oil contained in the market power alone should lead to supply in less quantity and lower prices. Competition is good as it lowers prices and raises prices by producers.”

LEAVING THE UAE OUT OF OPEC AND WHY IT MATTERS

The poster child for what could be the beginning of the end for OPEC came in late April when the United Arab Emirates (UAE) announced that it would leave OPEC and OPEC+ on May 1.

Flynn linked the US-Israeli war with Iran as a landmark. “I think that is really possible and many OPEC countries want to control their own destiny. In fact, if we look back at some of the strategic victories from Operation Epic Fury, it is because it changed the face of the OPEC cart forever and changed the dominance of energy from the cartel back in our hemisphere. The UAE was tired of playing second fiddle to the UEA leader of Saudi Arabia. leadership and has a competitive goal of not only increasing oil production in the long term, but it wants to show itself as a regional leader.”

The OPEC logo is pictured before an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers, Algeria Sept. 28, 2016. (Ramzi Boudina/File Photo/Reuters/Reuters)

The UAE’s simple act of abandoning the wagon quickly led to OPEC losing heavily.

“[The UAE’s] departure removes both the weight of production and the credibility of the institution, and that should worry Saudi Arabia and the rest,” said Elaine Dezenski, head of the Foundation for the Defense of Democracies’ (FDD) center on economic and financial strength. “I think now we see one of the last nails in the coffin of OPEC. We are seeing an alignment from the UAE to the US, which is, I think, part of the broader economic situation.”

Some analysts say it is more likely that the UAE’s decision to leave OPEC could create a domino effect. Other OPEC countries will have seen the news that the UAE will be able to increase its daily production from more than three million barrels per day to five million next year. That increase in production could easily prompt countries like Iraq to jump on board, as they would then be free to pump as much oil as they can and need rather than being held back by OPEC quotas.

HOW VENEZUELA GOT FROM SOUTH AMERICA TO A VERY POOR ECONOMY DESPITE HUGE OIL RESERVES

Oil prices fell in early Asian trade on Monday after OPEC+ agreed last week to gradually ease some of its production cuts between May and July. Photographer: Luke Sharrett/Bloomberg via Getty Images (Photographer: Luke Sharrett/Bloomberg via Getty Images)

Not everyone sees the end of the wagon.

“OPEC+ is not built around noise. It is built on capacity, credibility, and cooperation,” Salman Al-Ansari, a Saudi geopolitical analyst, told FOX Business. “In these circumstances, the UAE is not part of the decisive players in the group. Politically, this is not seen as a major economic downturn and more like a symbolic move to show strength and independence. But symbolism does not always translate to influence.”

Al-Ansari does not foresee the collapse of OPEC. “I believe that OPEC+ can continue to work and prosper,” he said. “The institution has been plagued by internal disagreements, and its power ultimately depends on effective cooperation rather than political signatures.”

But there is an additional factor to OPEC’s potential decline.

“Cartels have a long history of doing well for a while and then collapsing,” Pete Earle, director of economics and economic freedom at the American Institute for Economic Research, told FOX Business. The reason for that is that oil company members have an incentive to produce more fuel than their OPEC production quota. Also, cheating can ultimately lead to the collapse of an organization, he said.

There are some things that will be different if OPEC disappears. “I don’t know if the American energy producers, the oil producers, will feel happy about the low oil price,” said Bernard Haykel, CEO of FDD.

That said, America’s largest energy companies are very innovative in adapting to economic changes. They’ve been doing this for decades, so low prices may not pose much of a challenge.

TOPSHOT – Commercial ships are pictured offshore Dubai on March 11, 2026. A new attack struck three commercial ships in the Gulf on March 11, with one of the ships bursting into flames as Iran steps up its campaign against its oil-exporting neighbors, a threat. (AFP via Getty Images)

Earle also said that although oil prices will fall without OPEC, they will fluctuate, making anyone who buys fuel a roller-coaster ride. However, there are ways for energy companies to use complex financial derivatives to smooth out certain fluctuations.

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Earle said some countries are heavily dependent on oil revenues, and falling prices can have unintended consequences. “Lower, more stable prices that could reverse domestic instability.” He continued, “Iraq and Nigeria will probably be affected by the instability.”

Whatever happens to OPEC, there is good news ahead.

“It is possible that we will see lower prices in the future. I am not talking now or in six months, but let’s say a year from now, when things have returned to normal, you will see a much lower price because of this decision of the UAE,” said Haykel.

Flynn, a contributor to FOX Business, said, “OPEC is not just on life support, it’s dead in the traditional sense. This is no longer your father’s OPEC and the politics of oil have changed forever because of what has happened since Operation Epic Fury. However, as long as Saudi and Russia, their non-OPEC rival, stay together, they are still a force to be reckoned with.