“Mother of Mercy, is this the end of OPEC?” The Energy Report 04/29/2026

Edward G. Robinson said in the 1931 film Little Caesar—one of the iconic moments in early gangster movies—after he was shot, he utters the dying words: “Mother of mercy, is this the end of Rico?” Now, after the United Arab Emirates (UAE) made a public pronouncement that it would leave the OPEC cartel, some who in the past have viewed the cartel as a group of gangsters might ask, “Mother of mercy, is this the end of OPEC?”

And there’s little doubt that the United Arab Emirates has, for some time, been frustrated with their OPEC quota, leaving at least a million barrels a day that they could be producing under wraps. The tensions between Saudi Arabia and the UAE have been growing as the UAE wants to expand its dominance not only in oil production but also in regional prestige. So, it doesn’t help that Iran is a member of this club and, without provocation whatsoever, has attacked the UAE on multiple occasions. So much for being part of the club—it reminds me of the old joke: “I don’t want to belong to any club that would accept me as one of its members,” or maybe one that bombs the other members. The UAE has taken the brunt of Iran’s retaliatory attacks during the war. Iran has fired more than 2,800 drones and missiles at the country, far more than it fired at any other in the Gulf or even Israel.

The UAE has been at odds with Saudi Arabia and OPEC over its baseline quota, set in 2018 at about 3.2 million barrels per day. Since upgrading its oil fields, the UAE can now produce up to 4.85 million barrels daily, aiming for over 5 million. Due to the outdated quota, it leaves over 1 million barrels unused—the highest unused portion among major OPEC members. According to the Wall Street Journal, “The exit removes 13% of OPEC’s production capacity, harming its market management,” and the UAE, alongside Saudi Arabia, is one of the few members with significant spare capacity to influence market supply.

Except that the UAE can still react and I am sure that they are using a Trumpian policy of making the UAE first, with a longer-term goal of raising output to levels to challenge Saudi Arbia and the US as the world’s largest oil producers  years down the road.

The Iran war probably helped highlight the UAE’s announcement, because right now the UAE is in a very good position due to its pipelines, which allow it to export at least 50% of its oil production already. This gives the UAE a huge advantage over other OPEC oil producers whose supplies are cut off because of the shutdown of the Strait of Hormuz. This situation allows the UAE to gain market share from other OPEC producers, but mainly from Iran, which seems to have taken exception to the fact that they continue to be bombed by them during this war.

While this is bad news for OPEC, it’s good news overall—it’s a net positive. More oil from the UAE helps supply China and Japan, and it’s better that they buy from the UAE than from Iran or Russia. Longer term, the UAE wants to rise out of Saudi Arabia’s shadow and become a major producer and a competitor to the U.S. in global oil and gas flows. But competition is good! The Wall Street Journal says, “By withdrawing, the U.A.E. is diminishing its relationship with a longstanding Arab-led bloc and aligning itself more closely with the U.S.” So Iran’s bombing of its neighbors is pushing more countries in the world to improve diplomatic and economic relations with the U.S., in a sign that Trump’s foreign policy is making us stronger.

Not only will this war have the possibility of ending the Iranian terror regime but also maybe end the OPEC cartel, a long time US nemesis.  The U.A.E. said it would also exit OPEC+, a group of major oil producers that includes Russia, and gradually increase production afterward, it added.

The Wall Street Journal wrote that “Its departure therefore removes one of the core pillars underpinning OPEC’s ability to manage the market,” said Jorge Leon, head of geopolitical analysis at consulting firm Rystad Energy and a former energy demand analyst at OPEC. “Losing a member with 4.8 million barrels a day of capacity, and the ambition to produce more, takes a real tool out of the group’s hands.” The U.A.E. has taken the brunt of Iran’s retaliatory attacks during the war. Iran has fired more than 2,800 drones and missiles at the country, far more than it fired at any other in the Gulf or even Israel.

And is this the end of the Russian oil buying sanction waver

The American Petroleum Institute (API) delivered a very supportive set of inventory numbers this week, and the real headline is on the product side—especially gasoline making some people nervous as retail gas prices hit a four-year high. The API reported that U.S. crude oil inventories fell by 1.79 million barrels. Cushing stocks dropped another 820,000 barrels, keeping the pressure on WTI delivery-point supplies.

But the standout number is the whopping 8.47 million-barrel plunge in gasoline inventories—a massive draw that screams robust demand record exports and refinery maintenance as we head into the heart of the peak driving season. Distillate stocks also tightened by 2.60 million barrels. . With gasoline supplies shrinking dramatically, crack spreads should find solid support and refined product prices are getting a clear bullish lift. The current national average price for regular unleaded gasoline is $4.229 per gallon. Mid-grade gasoline averages $4.722, premium is at $5.093, and diesel fuel stands at $5.464 per gallon.

Oil prices also are gaining support from a Wall Street Journal report revealing that President Trump has told aides he is willing to end the U.S. military campaign against Iran even if the Strait of Hormuz remains largely closed, effectively leaving Tehran in firm control of the critical chokepoint for now and deferring any complex reopening operation.

The Journal is  raising concerns that the Strait will be closed for a longer time than some hoped for.  The Journal says that in recent assessments, Trump and his team determined that a full mission to pry open the waterway would exceed his desired four-to-six-week timeline for the conflict.

Instead, the administration plans to focus on its core objectives—significantly degrading Iran’s navy and missile capabilities—before winding down hostilities and shifting to diplomatic pressure on Tehran to restore free trade through the strait. Should that fail, the U.S. would look to European and Gulf allies to lead the effort, with other military options remaining on the table but not an immediate priority.

Trump reinforced this stance Tuesday morning on Truth Social, urging other nations to “Build up some delayed courage, go to the Strait, and just TAKE IT,” while declaring that Iran has been “essentially decimated” and telling allies they must now secure their own oil supplies.

Yet remember that when we hear these plans in the press from unnamed sources, they are subject to change, as we have seen many times during this conflict. In fact, it could change later today.

As we get the latest EIA Weekly Petroleum Status Report and the Fed’s policy decision, complete with what could be Chair Jerome Powell’s swan song press conference.  This has the potential to either supercharge prices higher or cool the rally, depending on the details, but the overall the moos remains bullish amid tight global supplies and geopolitical headlines.

On the Fed side, expectations are high for another steady-as-she-goes hold on rates (widely anticipated in the 3.50%-3.75% range). Powell’s final act as Chair could feature some memorable closing remarks as the baton passes toward Kevin Warsh.

At the same time, the EIA report shines the spotlight on U.S. gas supply, production, and exports — key pillars keeping American energy dominance strong. With domestic crude output humming along and LNG/export infrastructure running near full throttle, traders are eyeing draws (or builds) in inventories, refinery runs, and product demand. Strong export numbers would underscore America’s role as a global supplier, providing fresh tailwinds for prices even as the Strait of Hormuz situation lingers. Lower-than-expected builds or healthy demand signals could give bulls more rocket fuel.

Natural gas futures are trading slightly lower this morning, hovering near the $2.68 level. Mild spring weather continues to weigh on heating demand, while robust production and strong storage builds keep the market under pressure near multi-month lows.

Tomorrow’s EIA natural gas storage report will give us the latest read on how quickly supplies are rebuilding. I look for a solid 76 Bcf injection this week. The Fox Weather outlook fits right here and supports that call—mild to warm conditions are dominating much of the country, with highs in the 60s to 80s across the South, Midwest, and East, and only brief cooler shots into the Rockies, Northern Plains, and later in the week for the Midwest/Ohio Valley. Overall demand stays moderate, setting the stage for another healthy injection and keeping the storage surplus well above seasonal norms.  Download the Fox Weather app to keep up with all the weather news that moves the natgas market.  Also call Phil Flynn at 888-264-5665 or email pflynn@pricegroup.com (mailto:pflynn@pricegroup.com) to open your account. Follow me on X at @EnergyPhilFlynn