UAE's Decision to Leave OPEC: Implications for India's Energy Market

India's Energy Needs to Get a Boost as UAE Exits OPEC

The United Arab Emirates' (UAE) decision to leave the Organization of the Petroleum Exporting Countries (OPEC) is expected to have a significant impact on India's import bill. Analysts believe that the UAE's plans to increase production without being bound by OPEC quotas will help cushion crude oil prices once the current geopolitical crisis normalizes.

The UAE is one of India's top four crude oil suppliers, accounting for 80% of the country's energy needs. Its share in India's crude oil import basket increased to 11.1% during April-November 2025, up from 9.4% in the same period of the previous fiscal year. Despite the ongoing disruption in the Strait of Hormuz, the UAE's supply increased to 619,000 barrels per day (bpd) in April 2026, up from its previous fiscal year's average of 433,000 bpd.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Experts say that the UAE's departure from OPEC will erode the cartel's discipline over time and weaken its ability to manufacture scarcity, giving importers more room to breathe. The UAE plans to increase its production to 5 million bpd by 2027, up from its current 3 million bpd. Once this ramp-up happens, India will be a key beneficiary due to its geographical advantage, being closer to India than Brazil or the United States. India will also see a significant surge in crude share from the region, with the ramp-up expected to have a huge impact on the global supply while having a benign impact on prices.

India's energy diversification strategy has insulated its economy from intense global volatility, but analysts say that the middle east will continue to dominate the supply share. While the country's reliance on the middle east is significant, experts believe that the UAE's departure from OPEC is a sign of accelerated dedollarization, as the OPEC structure was originally built during a period where energy was pegged to the dollar.

The transition of energy trade away from the US dollar toward local currencies is a primary theme that could emerge from this move. India and the UAE have already begun trading oil in rupees, a process referred to as dedollarization. This move is considered a game-changer as it removes the necessity of a third-party currency (the USD) sitting between the two nations. The potential exit of the UAE from OPEC is viewed as a sign of accelerated dedollarization, which is expected to have a positive impact on India's energy trade in the long term.