Iran War Escalates as UAE Exits OPEC, Trump Rejects Hormuz Proposal
Sofia, Bulgaria — The two-month-old war between the U.S.-Israel coalition and Iran has entered a perilous fresh phase, reshaping global energy markets and testing diplomatic efforts to de-escalate the conflict. On Tuesday, April 28, 2026, the United Arab Emirates (UAE) announced its withdrawal from the Organization of the Petroleum Exporting Countries (OPEC), a move that sent shockwaves through the oil cartel and raised questions about its future stability. Meanwhile, U.S. President Donald Trump dismissed Iran’s latest proposal to reopen the Strait of Hormuz, calling it insufficient while claiming Tehran had privately admitted to being in a “state of collapse.”
The developments come as the World Bank warned that the conflict could trigger the largest oil supply shock on record, pushing energy prices up by nearly 25% and exacerbating inflation in vulnerable economies. With fighting between Israel and Hezbollah in Lebanon intensifying and no clear path to peace, the crisis shows no signs of abating.
UAE Quits OPEC Amid Hormuz Closure, Signaling Cartel’s Fracture
The UAE’s decision to leave OPEC, confirmed by the country’s energy minister in an interview with CNN, marks the first major defection from the 13-member cartel in over a decade. The minister cited the closure of the Strait of Hormuz—a critical chokepoint for global oil shipments—as a key factor, arguing that the UAE’s ability to influence global markets would be limited regardless of OPEC’s production quotas. “The closure of the Strait has already disrupted supply chains,” the minister said. “Our exit from OPEC allows us to pursue our own energy strategy without constraints.”
OPEC, founded in 1960, coordinates oil production among its members to stabilize prices and manage supply. The UAE’s departure follows years of tension over production quotas, which the country argued were too restrictive. Robin Mills, CEO of Qamar Energy, a Dubai-based consultancy, told CNN that the UAE’s current output is capped at around 3.2 million barrels per day under OPEC+ agreements. Without these restrictions, he suggested, the UAE could nearly double its production capacity. “If there is a time to leave, now is the time,” Mills said. “You might see Kazakhstan follow suit. That’s another significant producer that wants to grow.”
The UAE’s exit could embolden other members to reconsider their participation, particularly those frustrated by OPEC’s influence over their domestic energy policies. The move also underscores the broader geopolitical shifts triggered by the Iran war, which has disrupted oil flows from the Persian Gulf and sent prices soaring. International benchmark Brent Crude surpassed $112 a barrel on Tuesday, its highest level since Russia’s invasion of Ukraine in 2022, according to CBS News.
Trump Rejects Iran’s Hormuz Proposal, Citing “State of Collapse”
President Trump on Tuesday dismissed Iran’s latest diplomatic overture, which called for the U.S. And its allies to reopen the Strait of Hormuz to shipping traffic in exchange for a temporary freeze on discussions about Tehran’s nuclear program. In a statement to reporters, Trump claimed that Iran had privately informed the U.S. That it was in a “state of collapse,” though he provided no evidence to support the assertion. “They want us to open Hormuz, but they’re not offering anything meaningful in return,” Trump said. “We’re not going to reward bad behavior.”
The Iranian proposal, delivered through mediators in Pakistan, was seen as a potential olive branch after weeks of stalled negotiations. However, Trump’s rejection signals that the U.S. Remains unwilling to engage without significant concessions from Tehran. Iranian Foreign Minister Abbas Araghchi, who has been leading diplomatic efforts, has not publicly commented on Trump’s remarks. Earlier this month, Araghchi met with OPEC Secretary-General Haitham al-Ghais in St. Petersburg, Russia, where he urged the cartel to unite against potential U.S. Sanctions on Iran’s oil exports.
The Strait of Hormuz, a 21-mile-wide waterway between Iran and Oman, is one of the world’s most critical energy corridors. Before the war, roughly 21 million barrels of oil, or about 20% of global supply, passed through the strait daily. Since the conflict began on February 28, 2026, shipping traffic has been severely disrupted, with only a handful of vessels successfully navigating the route. On Tuesday, the first liquefied natural gas (LNG) tanker to pass through the strait since the war’s onset was reported by Corriere della Sera, though details about its cargo and destination remain unclear.
World Bank Warns of “Largest Oil Supply Shock on Record”
The World Bank’s latest Commodity Markets Outlook, released Tuesday, described the Iran war as “the largest oil supply shock on record,” with far-reaching consequences for the global economy. The report warned that energy prices could surge by nearly 25%, pushing inflation higher and increasing the cost of debt for developing nations. “The war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices, and finally, higher inflation, which will push up interest rates and make debt even more expensive,” said Indermit Gill, the World Bank Group’s Chief Economist.
The report highlighted the disproportionate impact on low-income countries, which are already grappling with food insecurity and economic instability. In Lebanon, where Israeli forces and Hezbollah have continued to exchange strikes despite a fragile ceasefire, the humanitarian situation has deteriorated rapidly. On Tuesday, the Israeli military issued evacuation warnings to residents in more than a dozen villages near the border, citing Hezbollah’s alleged violations of the truce. The group, which is backed by Iran, has denied the accusations, accusing Israel of escalating the conflict.
What Happens Next?
The path forward remains uncertain. Mediators in Pakistan are expected to receive a revised proposal from Iran in the coming days, though it is unclear whether the U.S. Will be receptive. Meanwhile, OPEC faces an existential challenge as its members weigh the benefits of remaining in the cartel against the lure of independent production. For now, the world watches as the Iran war continues to reshape geopolitics, energy markets, and the lives of millions caught in the crossfire.
The next scheduled diplomatic checkpoint is a meeting of OPEC’s remaining members in Vienna on May 5, where the cartel is expected to address the UAE’s departure and its implications for future production agreements. Until then, the global economy braces for further disruptions, with energy prices and inflation likely to remain volatile.
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