TOKYO: The United Arab Emirates’ withdrawal from OPEC (Organization of Petroleum Exporting Countries) and OPEC+ on May 1 could be of great benefit to Japan, according to ASAOKA Takahiro, a Senior Research Fellow at the Itochu Research Institute.
Asaoka says in an analysis published in Diamond Online that for oil-importing countries such as Japan, the weakening of OPEC+ “generally brings benefits. The system has historically suppressed output from low-cost producers while forcing higher-cost producers to fill the gap, raising global supply costs.”
The report says greater production flexibility in the UAE could reduce overall production costs globally and Japan is particularly well positioned to benefit.
The UAE is one of Japan’s largest crude oil suppliers, alongside Saudi Arabia, but the relationship extends beyond trade. Japanese companies hold upstream oil concessions in Abu Dhabi and participate directly in production expansion projects, unlike Saudi Arabia, where relations are primarily based on crude sales.
The UAE government says its decision to quit OPEC is based on its long-term energy strategy and production capacity. However, the underlying driver was a persistent gap between the UAE’s actual production capability and its allocated OPEC+ production quota.
According to the report, UAE dissatisfaction is not new. During the major OPEC+ production cuts in April 2020, member quotas were based on October 2018 production levels, a benchmark that placed the UAE at a disadvantage. Although initially accepted as part of the COVID-19 crisis response, prolonged production restraint increasingly became a constraint on investment recovery and output expansion.
In July 2021, a compromise was reached to raise the UAE’s baseline production capacity to 3.5 million barrels per day from May 2022. However, this level still fell short of the country’s actual production potential. The decisive factor behind the exit was rising tensions involving Iran.
From the UAE’s perspective, Asaoka believes, the situation created a strategic window: it could secure greater future production flexibility while minimizing immediate price shocks. This timing made the decision economically rational.
“Non-oil sectors in the UAE have expanded significantly. A central driver of this diversification is Abu Dhabi’s sovereign wealth funds, which invest globally across equities, bonds, real estate, infrastructure and high-growth sectors such as semiconductors, artificial intelligence, renewable energy and data centers. The UAE has thus evolved into both an oil exporter and a major global investment power.”
The UAE is also strengthening its export infrastructure to reduce reliance on the Strait of Hormuz. Alongside the existing Abu Dhabi–Fujairah pipeline, a new pipeline bypassing the Strait toward Fujairah on the Gulf of Oman is under construction. Asaoka concludes that by expanding alternative export routes, the UAE is reducing its vulnerability to geopolitical chokepoints. This enhances supply stability for import-dependent countries such as Japan and strengthens global energy security.