The oil production of the United Arab Emirates (UAE) reached a historic high last month. This growth occurred against the backdrop of weakening concerns regarding Iran's control over the Strait of Hormuz and thanks to the UAE's departure from the energy alliance led by Saudi Arabia, OPEC.
According to a report by the International Atomic Energy Agency (IAEA), published on Friday, in June the UAE pumped 4.1 million barrels of oil per day (bpd). This is a significant increase compared to the average UAE production figure in 2025, which was 3.5 million bpd. The current volume exceeds the previous UAE maximum of four million bpd, recorded in 2020 when OPEC+ was engaged in a price war between Saudi Arabia and Russia.
The sharp rise in output reflects analysts' view that Abu Dhabi had long felt constraints imposed by Saudi Arabia within OPEC. The UAE invested heavily in expanding production capacities but complained that Saudi Arabia hindered increased output to support prices. Abu Dhabi left OPEC in May as part of a broader rift with Riyadh, which includes disagreements over Yemen, Sudan, and Israel.
The UAE's exit from OPEC was approved by the Trump administration, which closely monitors energy price increases amid the war between the US and Israel against Iran. The price of the international Brent benchmark rose above $100 per barrel at the peak of the war that began on February 28, but did not show the expected sharp rise despite the blockades imposed by Iran and subsequently the US in the Strait of Hormuz. Analysts note that prices were contained due to historical inventory releases by Western countries and China's decision to reduce crude oil imports by approximately 30 percent. The combination of increased supply and reduced demand served as a buffer for the global economy, although prices for petroleum products such as diesel fuel, aviation fuel, and liquefied petroleum gas rose.
Buyers in Asia, who are heavily dependent on Persian Gulf energy resources, faced much higher prices than consumers in the US and Western Europe. The IAEA warned in its report that while crude oil is returning to the market, Gulf petroleum products remain below half of pre-war levels. Nevertheless, the UAE's ability to maintain exports highlights how the country managed to bypass Iranian control over the Strait of Hormuz. The UAE has a pipeline ending in the port of Fujairah that allows it to avoid the Strait of Hormuz, although the country remains vulnerable to Iranian drone attacks.
Reuters reported in June that the UAE paid Iran billions of dollars in exchange for the cessation of attacks on the country. This was an unexpected turn for the Gulf state, which during the war participated in dozens of attacks against Iran jointly with the US and Israel. Maritime intelligence experts claim that the UAE is also shipping oil through the Strait of Hormuz on 'shadow' vessels, having disabled their transponders. The Gulf state possesses its own fleet of tankers and has approached ship owners willing to risk Iranian strikes for higher freight rates.
Thanks to the reduction in tensions in the Middle East, oil and gas-laden vessels have begun passing through the Strait of Hormuz without hindrance, supplying a significant portion of global energy demand. Consequently, there is a steady decline in crude oil prices on the international market. On Monday, the price of Brent Crude fell below the $72 per barrel mark.
The decline in crude oil prices continues on the global market. By the time of publication, the price of Brent Crude had fallen further, trading around $71 per barrel. Meanwhile, WTI Crude Oil Price dropped to $68 per barrel, while the price of Marban Crude Oil showed a slight increase, trading around $66 per barrel.
Positive signals regarding a peace agreement between the US and Iran, as well as the holding of meetings, have helped the energy crisis affecting many countries, including Pakistan, India, Bangladesh, and the UK, begin to subside. Since the Strait of Hormuz remains open and tankers continue to move, the supply chain for oil and gas is recovering. Although the situation level is still below pre-war levels, this is putting downward pressure on crude oil prices, causing them to fall.
In parallel, OPEC+ countries made an important decision regarding the oil industry. Seven OPEC+ member countries agreed to increase oil production starting next month. According to the report, an additional production of 188 thousand barrels of crude oil per day was approved under the leadership of Saudi Arabia and Russia. This means that the market will receive sufficient oil supplies in the future. The agreement to increase production has been reached for the fifth consecutive month.
Previously, there were serious disagreements among OPEC+ countries regarding production quotas, market share, and oil prices. Some states insisted on limiting production to maintain prices, while others focused on increasing output to boost revenues. However, after these disputes, the OPEC+ countries, including Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman, unanimously decided to raise production on Sunday.
If crude oil production increases by 188 thousand barrels per day according to the producers' agreement, this will undoubtedly increase downward pressure on crude oil prices, potentially leading to further declines. Such price drops will bring relief to import-dependent countries like India, as the cost for OMC companies will decrease, also raising hopes for cheaper gasoline and diesel fuel. Nevertheless, it is premature to speak of an immediate price drop, as the final fuel cost in the country depends on multiple factors: rupee fluctuations against the dollar, refining costs, transportation expenses, and local VAT taxes.
Amid significant losses for state oil companies due to Middle East tensions, gasoline and diesel prices in India were increased by approximately 7 rupees per liter over four consecutive periods. Now that the Strait of Hormuz is open and crude oil is becoming cheaper, Energy Minister Hardeep Singh Puri provided clarification regarding potential price reductions. He noted that shares of private companies and OMCs were acquired two to two and a half months ago when crude oil prices were higher. He emphasized that the situation will become clear in the foreseeable future if prices remain at the current level, and he considers making assumptions inappropriate.
