The United Arab Emirates couldn’t have found a more opportune time to declare its departure from OPEC and OPEC+, unilaterally and symbolically, on the day when GCC unity was the central agenda item of the GCC meeting in Riyadh. Although the UAE has been unhappy about underproducing oil despite having the capability to produce at least 5 million barrels per day (mbpd), much higher than the existing 3–3.5 mbpd, it complied with the production limits mostly to maintain Gulf unity.The immediate effect, absent the Hormuz crisis, is indeed an oversupply of oil in the market, with a possible significant price decline and increased buyer interest in UAE crude. Japan is the largest buyer of Emirati oil ($31.4 billion), followed by China ($22.1 billion), Thailand ($14.7 billion), India ($13.5 billion), and South Korea ($11.9 billion). Nearly 90% of total crude exports go to Asian markets.Diversifying away from oil dependenceFor the last three decades, the GCC states have been pursuing the diversification of their oil-dominant economies and reducing their dependence on oil. In this competition, the UAE has been the most successful country, diversifying so that oil now accounts for 20% of its GDP, with trade, finance, manufacturing, tourism, real estate, and logistics as the new growth drivers. This has made the UAE the second-largest economy in the Gulf and the 30th-largest economy in the world. Its success in diversification has integrated its economy into global networks and reduced its dependence on the Gulf alone. The UAE’s share in intra-GCC trade is also declining; it has emerged as a key re-export economy, with nearly half of $600 billion in exports comprising re-exports.However, the regional crises — wars against Gaza and Iran — may be distracting from this success. The intra-GCC rivalry had been building for a long time. The UAE’s hurried entry into the Abraham Accords allowed it to overcome two main problems and expand its security doctrine and trade beyond the GCC. From the day the UAE normalised relations with Israel, the Gulf security architecture had lost its distinctiveness. The UAE has expanded and deepened its security footprint in Yemen, Sudan, Somaliland, and Libya.The “strategic autonomy” that the UAE has achieved in the last few years poses a challenge to Saudi Arabia’s centrality in the region, once expressed in the phrase “all roads lead to Riyadh”. Given that disagreements between Riyadh and Abu Dhabi over resolving the crises in Iran, Gaza, Sudan, and Yemen were already well known, the OPEC exit didn’t come as a big surprise. It has rather confirmed that Saudi Arabia’s centrality in the GCC, as well as in the Middle East’s security, has weakened significantly, if not collapsed yet.Also in Explained | The UAE’s exit from OPEC, and its possible impact on global oil pricesIf the Hormuz crisis is resolved, the UAE can quickly ramp up its exports to 4 Mbpd, pumping more barrels per day and putting temporary pressure on prices. Asian markets, mainly India, China, Japan, and South Korea, stand to gain at least in the short term. The UAE would like to invest heavily in a non-oil economy to maintain higher growth.After the ceasefire, a reckoning awaitsThe mid-term and long-term implications of the UAE’s unilateralism have also upset the existing energy and security arrangements, forcing other GCC and Arab states to rally behind Saudi Arabia. Gulf solidarity is at stake. As expected, the UAE’s key allies, the United States and Israel, have welcomed the UAE’s exit. With Hormuz blocked and the ceasefire dialogue to end US-Israel hostilities remaining stalled, the US faces serious criticism and pressure from Europe and allies. The UAE might ease some of the pressure by accelerating its production. China and India will also benefit in the short term.Story continues below this adBut the real competition and confrontation might begin when a permanent ceasefire is achieved, and Iran receives relief from sanctions on oil exports. If Saudi Arabia moves to discipline countries within NATO’s mandate (please clarify), it might take steps against the UAE should the UAE increase its quota. These measures may include oversupply or underproduction. While the UAE has a short-term advantage, Saudi Arabia has proven capacity and infrastructure for overproduction.The UAE-Israel security and defence cooperation might further deepen Saudi mistrust of the UAE. The Saudi-Pakistani defence agreement and the growing Saudi-Türkiye relations are steadily expanding the GCC security architecture, with or without the UAE.NewsletterFollow our daily newsletter so you never miss anything important. On Wednesday, we answer readers' questions.SubscribeWhile the UAE is located 2,500 km away from Israel, Saudi Arabia is just 300 km from Israel and well within the range of Israel’s advanced weaponry. Israel’s war on Gaza and its dismissal of Saudi Arabia’s Arab Peace Initiative have deepened this asymmetry. With the US and Europe backing Israel, and no American efforts to rebuild trust between Israel and Saudi Arabia, Saudi Arabia and Egypt have been left isolated in their region. This mistrust has propelled Saudi Arabia to declare that it has no plans to recognise Israel without a Palestinian state. That divide is unlikely to close soon. Meanwhile, Saudi Arabia has shown flexibility with a potential extension of the Pakistan-Saudi defence agreement to include Turkey and Egypt.While a complete rupture in Saudi-UAE ties remains unlikely, the gradual divergence of their regional and global perspectives — and their drift toward competing regional arrangements, such as the Saudi-Pakistani defence agreement vs UAE-Israel cooperation — are early signs of a full-blown crisis. Having mediated between Iran and Saudi Arabia, China would like to sit out a future crisis, while India, with major economic exposure to both countries, cannot afford to. Most tellingly, Abu Dhabi National Oil Company (ADNOC), the UAE’s state oil giant, sees its production push as more than a commercial opportunity — it is a bid for the kind of regional influence, over crises from Sudan to Yemen to Libya, that Aramco, its Saudi counterpart, and Riyadh have long monopolised.