Crude Oil Prices Near Three-Week High as UAE Exits OPEC Amid Ongoing Tensions in the Strait of Hormuz and US-Iran Unrest

Crude Oil Price Sees Buying Amid Uncertainty Over Middle East Tensions

The crude oil price witnessed buying during the early morning session on Wednesday, with WTI crude oil prices regaining the psychological $100/bbl level, inching close to a three-week high. The WTI crude oil price today opened flat, but soon gained momentum, reaching an intraday high of $100.36/bbl. The Brent crude oil price also hit an intraday high of $104.95/bbl, rising more than 1.25% against the intraday low of $103.68 per barrel.

Market experts attribute the rise in crude oil prices to fresh uncertainty over Middle East tensions. The ongoing US-Iran war and the disruption of the Strait of Hormuz, an important OPEC member, have contributed to the increase in crude oil prices. The UAE, an important OPEC member, has announced its intention to leave OPEC, effective from 1st May 2026. However, market experts believe that the appreciation in the crude oil price will be limited as the UAE's withdrawal from OPEC won't necessarily have any immediate effects in markets.

| Comparison of Crude Oil Prices | | --- | --- | | Pre-war Brent crude price | $74.45/bbl | | Current Brent crude price | $111/bbl | | Percentage increase | 49.5% |

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Market experts believe that world oil supplies are sharply constrained by the war in Iran, which has closed off the Strait of Hormuz, a waterway through which one-fifth of global oil supplies — including much of the UAE's — is transported. The UAE has been producing around 3.4 million barrels of crude a day just before the US-Iran war began on February 28. Analysts say it has the capacity to produce roughly 5 million barrels a day.

Regional politics weigh heavily on OPEC, with the UAE having increasingly frosty relations with Saudi Arabia, OPEC's largest producer, over political and economic matters in the Mideast. The UAE's withdrawal from OPEC removes one of OPEC's few members with the ability to quickly increase production, said Jorge Leon, head of geopolitical analysis at Rystad Energy. A structurally weaker OPEC, with less spare capacity concentrated within the group, will find it increasingly difficult to calibrate supply and stabilize prices.

The UAE's withdrawal from OPEC won't necessarily have any immediate effects on markets, as world oil supplies are sharply constrained by the war in Iran. OPEC accounts for roughly 40% of the world's oil output, but its market power has been waning in recent years as the United States ramped up production. While Saudi Arabia had been producing more than 10 million barrels of oil a day before the war, the U.S. pumps more than 13 million barrels a day.

The UAE, which joined OPEC through its emirate of Abu Dhabi in 1967, had been producing around 3.4 million barrels of crude a day just before the US-Iran war began on February 28. Analysts say it has the capacity to produce roughly 5 million barrels a day. The UAE's decision to leave OPEC reflects its long-term strategic and economic vision and evolving energy profile, including accelerated investment in domestic energy production.

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Saudi Arabia and the UAE have increasingly competed over economic issues and regional politics, particularly in the Red Sea area. The two countries had jointly fought against Yemen's Iran-backed Houthi rebels in 2015. However, that coalition broke down into recriminations in late December, when Saudi Arabia bombed what it described as a weapons shipment bound for Yemeni separatists backed by the UAE.