The United Arab Emirates’ decision to leave OPEC, effective 1 May, comes at a moment when the global oil market is already under severe strain—and when oil majors are reporting a new wave of exceptional profits.

Taken together, experts highlight the two developments as a deeper shift underway: a market increasingly shaped by geopolitical shocks on the one hand and weakening coordination among producers on the other, while governments scramble to respond to the political fallout at home.

Structural weakening of OPEC

The UAE’s departure marks a rare break within a cartel long dominated by Saudi Arabia and its allies. For decades, OPEC’s ability to manage supply has been central to stabilizing oil prices.

By stepping away, the UAE signals a willingness to prioritize national production growth over collective discipline. “This is a structural weakening of OPEC,” said an analyst at Rystad Energy, noting that the group’s ability to enforce quotas could diminish over time.

The timing is striking. Oil prices have surged amid the ongoing confrontation involving Iran, with disruptions to shipping through the Strait of Hormuz pushing crude above $100.

That surge has translated directly into higher earnings for the industry. BP reported profits more than doubling in the first quarter, while TotalEnergies and Sinopec also posted strong gains.

Profits expand

“The current environment is almost a textbook example of how geopolitical risk feeds into oil company margins,” said an energy economist at Columbia University. “Prices rise quickly, but costs do not adjust at the same pace, so profits expand.”

That dynamic is not going unnoticed in Europe, where consumers are once again facing rising fuel bills. Governments are under pressure to act, reviving debates that first emerged during the 2022 energy crisis.

Within the European Union, officials are already discussing whether existing windfall taxes on fossil fuel companies should be extended or tightened. “If extraordinary profits persist, there will be political pressure to capture part of those gains,” said a Brussels-based policy analyst.

Belgium remains hesitant

In Belgium, the political response remains hesitant. While fuel prices have surged to record levels, the federal government is struggling to agree on relief measures.

Prime Minister Bart De Wever has ruled out broad support, citing limited budgetary room, while coalition partners push for targeted interventions.

Unlike several larger EU economies that have called for a new windfall tax on oil companies, Belgium has so far taken a more cautious stance, wary of acting without European coordination. The result is a growing tension between rising consumer costs and the perception that extraordinary profits in the oil sector are going largely untouched.

Other EU member states, including France and Italy, have experimented with windfall levies in recent years and could revisit them if high prices persist. The trade-off is delicate: taxing producers too heavily risks discouraging investment, while failing to act fuels public anger over perceived “war profits.”

“Governments are caught between protecting consumers and maintaining energy supply,” said an analyst at Bruegel. “There is no easy solution when prices are driven by global events beyond their control.”

Maximizing market share

In the near term, most experts see the geopolitical shock as the dominant force. “The immediate impact of the UAE’s exit on prices will likely be limited,” said a commodities strategist at a major European bank. Physical supply remains constrained, and the risk premium tied to Middle East tensions continues to underpin the market.

Over the longer term, however, analysts argue that the UAE’s move could fundamentally alter how oil prices are set. Freed from OPEC quotas, Abu Dhabi is expected to significantly increase its production capacity.

That could encourage other producers to follow suit, eroding the cartel’s cohesion. “Once discipline weakens, the incentive shifts toward maximizing market share,” said a senior analyst at Wood Mackenzie. “That’s when you move from a managed market to a competitive one.”

Such a shift would not necessarily mean permanently lower prices. Instead, many economists foresee a more volatile market, characterized by sharper cycles of boom and bust. Without coordinated supply cuts during downturns—or restraint during upswings—prices could fluctuate more dramatically than in the past decade.

For now, the winners are clear. Large international oil companies, particularly those with production outside the conflict zone, are benefiting from higher prices and strong trading margins.

Petro-states such as Saudi Arabia are also seeing revenues surge. The losers are equally evident: consumers, transport sectors and energy-intensive industries are bearing the cost of higher fuel prices, feeding inflation across the broader economy.

Implications for electric mobility

This evolving landscape has direct implications for the transition to electric mobility. In the short term, high oil prices tend to accelerate the uptake of electric vehicles. “When fuel prices spike, consumers respond quickly,” said a transport analyst at the International Energy Agency. “We consistently see stronger EV sales growth in periods of elevated oil prices.”

Yet the longer-term effect is more complex. If OPEC’s weakening leads to periods of lower oil prices, the economic case for switching away from combustion engines could weaken, particularly in regions with less robust policy support. At the same time, volatility itself may prove decisive. “It’s not just the level of oil prices that matters, it’s their unpredictability,” the same analyst added. “Uncertainty makes alternatives like electrification more attractive.”

There is also a broader strategic tension. The windfall profits currently flowing to oil companies are, in many cases, being channeled into shareholder returns or new upstream investments rather than accelerating the transition to low-carbon energy. Critics argue this risks locking in fossil fuel dependence even as governments seek to reduce it.

In that sense, the UAE’s exit from OPEC and the profit surge linked to the Iran crisis point to the same underlying reality: a global oil system that is becoming harder to manage and less predictable.