UAE OPEC exit signals de-dollarisation, positive for India's "Oil for rupee": Kotak Securities

Mumbai (Maharashtra) [India], April 29 : The impact of the United Arab Emirates (UAE) exiting OPEC on global oil prices will depend on when supply through the Strait of Hormuz normalises, and with strong relation between India-UAE, the move could also accelerate oil-for-rupee trade, according to Anindya Banerjee, Head of Research for Currency and Commodities, Kotak Securities.

In an exclusive conversation with ANI, Banerjee said that the short- to medium-term outlook remains tied to supply disruptions in West Asia. Once the West Asia situation stabilises and oil flows return to normal, the UAE's exit from OPEC is likely to have a downward impact on oil prices.

"...Once the situation normalises in West Asia and oil begins to flow, the UAE stepping out of OPEC will definitely be bearish for oil prices because they also hold a significant spare capacity which they had taken offline because of the OPEC agreements," he said.

He added that while Saudi Arabia remains the most important member of OPEC, the UAE's move is structurally negative for oil prices in the long term.

Banerjee noted that the UAE's production is significant, with plans to reach 5 million barrels per day by the end of 2027, making it a key global supplier with about 3 to 4 per cent share of global oil supply.

He linked the development to broader global shifts in the energy trade system. "Honestly, we see this as a step towards the ongoing de-dollarisation process, which is happening globally... we are seeing that structure is being unwound, is being reversed, and all these actions are in that direction..."

He said that in the future, oil trade may increasingly move away from the US dollar, with transactions taking place in currencies such as the yuan, rupee and others.

On India-UAE relations, Banerjee said strong strategic ties between the two countries could help India secure stable energy supplies and promote alternative trade mechanisms.

"Absolutely, oh because UAE and India has become strategic partners across various sectors... So I think the oil for rupee program will gain momentum, as I said, in the multipolar world order...," he said.

He added that growing cooperation between Asian and West Asian countries reflects an emerging multi-polar global order, where countries are increasingly looking beyond traditional dollar-based systems.

Overall, Banerjee said that while immediate impact depends on supply normalisation, the UAE's exit from OPEC could have long-term implications for oil prices, global energy trade, and currency dynamics.

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