Oil Prices Ease as Markets Weigh UAE’s OPEC Exit Against Hormuz Supply Risks

Oil prices edged lower on Wednesday after a week-long rally, as traders assessed the implications of the United Arab Emirates’ decision to leave OPEC while continuing to monitor supply risks linked to the ongoing standoff involving Iran.

Brent crude for June delivery slipped by 1 cent to $111.25 a barrel in early trading. The benchmark had risen for seven consecutive sessions. The more actively traded July contract fell 28 cents to $104.12 a barrel.

Market analysts said the modest decline reflected investor reaction to the UAE’s unexpected departure from the producer group. As one of OPEC’s major producers with significant spare capacity, the UAE could eventually raise output once it is no longer bound by the organisation’s production quotas.

That prospect has improved the longer-term supply outlook, although any additional production is unlikely to reach the market immediately.

Analysts noted that the continuing closure of the Strait of Hormuz remains a major obstacle. The strategic waterway, which handles roughly one-fifth of global oil and liquefied natural gas shipments, remains disrupted amid heightened regional tensions.

The market remains tightly supported by concerns over restricted flows through the strait. Iran has closed the passage, while the United States has intensified economic pressure by maintaining restrictions on Iranian shipping and port access.

Reports from Washington suggest the current measures could remain in place for some time. President Donald Trump has reportedly instructed advisers to prepare for an extended blockade aimed at further constraining Iran’s economy and oil exports.

Although a ceasefire has halted direct hostilities between the United States, Israel and Iran, negotiations toward a permanent settlement remain stalled. The United States continues to demand that Iran abandon what it describes as a nuclear weapons programme. Tehran, meanwhile, is seeking sanctions relief, compensation for wartime damage and a role in determining future arrangements in the Strait of Hormuz.

Analysts said the supply disruption caused by the closure of Hormuz remains the primary driver of elevated prices. Any extension of the blockade could place additional strain on global energy markets and keep crude prices well above recent averages.

Further support has come from declining U.S. oil inventories. According to market sources citing data from the American Petroleum Institute, U.S. crude stockpiles fell by 1.79 million barrels in the week ending April 24. Gasoline inventories dropped by 8.47 million barrels, while distillate stocks declined by 2.6 million barrels.

The drawdown in inventories points to strong demand and tightening supplies, reinforcing the market’s sensitivity to geopolitical developments.

For now, analysts view Wednesday’s price movement as a minor correction rather than a shift in trend, with oil continuing to trade at historically elevated levels.