U.S. gas prices could fall after UAE's latest move

By TheStreet Roundtable

8 days ago

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A fresh shock to global energy markets is forcing traders to rethink one of the most closely watched variables this year: oil supply.

The shift comes at a time when geopolitical tensions, disrupted shipping routes and failed diplomacy have already pushed crude prices higher and fueled inflation fears.

For weeks, markets have been reacting to tightening supply conditions tied to the Iran war and disruptions in the Strait of Hormuz, a pattern that has also weighed on risk assets like Bitcoin during periods of heightened uncertainty.

Rising crude prices have translated directly into higher fuel costs, with U.S. gasoline recently climbing to around $4.11 per gallon, according to industry data. Now, a major structural change in the oil market is adding a new layer of complexity.

UAE exit shakes global oil supply structure

The Organization of the Petroleum Exporting Countries suffered a major blow on April 28 after the United Arab Emirates confirmed it will leave both OPEC and the broader OPEC+ alliance effective May 1.

The move marks a rare fracture within the oil-producing bloc, which has historically coordinated output to stabilize prices and manage global supply.

“This decision reflects the UAE’s long-term strategic and economic vision and evolving energy profile,” the country said in an official statement, adding that it would continue to play a “responsible” role in global markets after its exit.

The departure raises immediate concerns about the group’s ability to maintain supply discipline, especially as geopolitical risks remain elevated.

With tensions already disrupting flows through the Strait of Hormuz, the loss of coordination within OPEC introduces fresh uncertainty into an already fragile system.

More supply later could ease U.S. gas prices

While the initial reaction has been dominated by uncertainty, the longer-term implications point in a different direction.

The UAE signaled it will gradually increase production after leaving the alliance, stating it would bring:

“Additional production to market in a gradual and measured manner.”

In simple terms, more oil entering global markets could eventually ease supply constraints. If sustained, this increase in output could:

Push crude prices lower over time
Reduce refining costs
Translate into cheaper gasoline for consumers

Since fuel prices closely follow crude oil, any sustained drop in oil would likely feed through to lower gas prices in the US. However, the key distinction is timing.

While more supply could bring relief, those barrels won’t hit the market immediately, meaning any drop in gas prices would come later, not now.

Markets react to uncertainty, not future supply

Despite the longer-term supply boost, markets are reacting to the immediate shock.

Crude oil surged, with prices going past the $100 mark and gaining roughly 3.6% on the day as traders priced in instability and a breakdown in coordinated supply management.

At the same time, traditional safe-haven assets moved sharply lower. Gold fell to around $4,595, down 1.85%, while silver dropped 2.44% to $73.65.

Crypto markets also weakened, reflecting a broader risk-off tone. Bitcoin slipped to about $76,299, down 1.97%, with total crypto market capitalization declining by over $27 billion.

The divergence highlights a key market dynamic: traders are prioritizing short-term uncertainty over long-term supply increases. In effect, oil is rising not because supply is shrinking, but because the system that manages that supply has been disrupted.