Director, research and programs, Global Energy Center, Atlantic Council
One OPEC-xit does not spell collapse
The United Arab Emirates’ April 28 decision to withdraw from the Organization of the Petroleum Exporting Countries, or OPEC, has been a long time coming. Reports that Abu Dhabi was exploring an exit have swirled for years, driven by its longstanding ambitions to expand production capacity that were at odds with OPEC’s production quotas. Two factors made this moment opportune: the prospect of capitalizing on increased demand in the wake of the Strait of Hormuz closure, and the low likelihood of a volatile oil price response. Markets cannot anticipate a massive surge in crude flows while the strait remains closed.
Abu Dhabi is not the only Gulf capital to view increased oil production as a necessary tool of post-conflict recovery, especially with non-OPEC oil production growing and becoming more attractive as consuming countries endeavor to limit their vulnerability to chokepoints like the Strait of Hormuz. It’s too soon to jump to the conclusion that OPEC is about to collapse. But the UAE’s withdrawal reflects the type of national interests that will shape the energy endgame of the conflict in Iran—interests which the cartel will have to carefully manage with one of its key members gone.
THE LATEST
Defense and security
As Europe navigates the war’s fallout, Germany is sending a minesweeper toward the Gulf
REUTERS/Yves Herman
Berlin is sending the minehunting ship Fulda to the Mediterranean in preparation for a multinational mission to secure the Strait of Hormuz, though any deployment into the waterway itself will require parliamentary approval and a cessation of hostilities. The move comes as military spending by Central and Western European countries surged 14 percent in 2025 to $864 billion, the largest increase year on year since the end of the Cold War. Saudi Arabia is now the world’s eighth largest military spender, with its defense budget rising 1.4 percent to $83.2 billion.
Expert take
Torrey Taussig
Director and senior fellow, Transatlantic Security Initiative of the Scowcroft Center for Strategy and Security, Atlantic Council
“Germany's decision to send a minesweeper toward the Gulf should be applauded, as minesweeping operations and military escorts of commercial vessels will be essential to re-opening the strait. Behind the scenes, Berlin and other European capitals are struggling to manage the fallout from a conflict they were neither consulted on nor informed about. To defend European security and economic interests, Germany and other capitals must step up not only with military assets but also the political willpower (i.e., parliamentary approval) to re-open the strait in the event of a ceasefire”.
Diplomacy
Gulf states are tapping Ukraine’s expertise protecting energy sites
Tehran and Washington did not meet this week, but European and Gulf countries engaged with both belligerents: Oman’s sultan hosted Iran’s foreign minister Sunday, and UK Prime Minister Keir Starmer discussed with US President Donald Trump “the urgent need to get shipping moving again” through the strait. Elsewhere, the secretary general of the Gulf Cooperation Council joined European leaders at a two-day meeting of the Council of the European Union, and Ukrainian President Volodymyr Zelenskyy concluded his second visit to Saudi Arabia since the US-Israeli war began.
Expert take
Aaron Korewa
Director, Atlantic Council Warsaw Office
“One news item that should make Europeans and Americans take notice is Ukraine's leader visiting Saudi Arabia for a second time. This is not because of charity from the Gulf states. It’s because Ukraine has vast experience and expertise facing drone attacks against energy infrastructure. Ukraine has previously signed tangible agreements on co-production of anti-drone systems with several Gulf states—not vague memoranda of understanding, but concrete plans. For Europe, Ukraine is even more valuable than for the Gulf, because Ukrainians have the only real frontline experience of fighting Russia. It’s therefore high time Europe (and the US for that matter) starts treating Ukraine for what it is—not an aid project, but a huge strategic asset.”
Energy
Costly infrastructure to bypass the Strait of Hormuz looks “justifiable” now
European Commission President Ursula von der Leyen said the EU is prepared to co-invest with Gulf countries in alternative energy infrastructure that avoids the strait, calling the war’s disruption to shipping a direct threat to European industry. She also offered European support to rebuild damaged Gulf energy facilities. The economic toll from the strait’s closure is mounting as Qatar’s economy is expected to contract by 6 percent, Kuwait’s by 4.4 percent, and Bahrain’s by 2.9 percent this year, a reversal of the growth forecasts issued in January and the GCC’s deepest downturn since the pandemic.
Expert take
Elina Carpen
Associate director, Global Energy Center, Atlantic Council
“Although diversification and bypass infrastructure have been encouraged for decades, the prevailing view has long been that current costs were not steep enough to justify the scale of investment required. The war has shifted this calculus. Accelerated investment in bypass routes and the EU's willingness to co-invest in alternative infrastructure suggests that the price tag of this buildout is now far more justifiable—though it will take time.”
Economy
With growth forecasts slashed, stagflation is haunting economic policymakers
As the economic impacts from the war worsen by the week, the European Commission is preparing contingency measures to support its member states facing higher energy costs and supply chain disruptions. European Commissioner for Economy Valdis Dombrovskis warned that “we will have to revise our [full-year] economic forecast down” in May. Similarly, Qatar disclosed a trade deficit of $1.2 billion in March—its first ever— with forecasts assessing the damage to its economy between 6.1 to 9 percent of its GDP. Rising inflationary headwinds leave central banks globally with limited leeway to ease interest, forcing tighter financing conditions and higher bond yields.
Expert take
Valbona Zeneli
Nonresident senior fellow, Europe Center and the Transatlantic Security Initiative of the Scowcroft Center for Strategy and Security, Atlantic Council
“Persistent disruptions since Russia invaded Ukraine have exposed structural vulnerabilities in the EU’s economic model, notably its dependence on external energy inputs and deeply globalized supply chains. The result is a gradual but consequential shift toward economic security, encompassing diversification, selective reshoring, and expanded domestic capacity. Inflation in this context remains predominantly supply-driven, rooted in energy costs and logistical frictions, placing the European Central Bank in a constrained position: monetary tightening risks exacerbating slowdown without resolving underlying bottlenecks.
Against this backdrop, cooperation between the European Union and the Gulf countries becomes less a matter of choice than necessity.”
