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The United Arab Emirates' (UAE) decision to leave OPEC and the OPEC+ alliance, effective May 1, 2026, has sent ripples through the global oil market. This move by a significant oil-producing nation could alter the dynamics of oil pricing and, consequently, affect the Kazakhstani tenge. Economist Zhanat Nurgaliyev has outlined three potential scenarios for how these changes might unfold.

Scenario 1: Continued Geopolitical Tension

In a world marked by ongoing geopolitical instability, oil prices are likely to remain elevated. Even if the UAE increases its production, Nurgaliyev suggests this might not significantly pressure the market, potentially leading to only a 5-10% decrease in prices. This scenario could see oil prices stabilize around $110-$115 per barrel.

Scenario 2: Market Stabilization

A second, more optimistic scenario involves market stabilization. If global conflicts subside, logistics improve, and restrictions are lifted, oil prices could return to a more balanced range of approximately $75-$90 per barrel. Nurgaliyev describes this as the most favorable price range for the market and, by extension, for Kazakhstan's economy.

Scenario 3: Price Decline and Economic Pressure

The third scenario presents a more challenging outlook. Should oil prices fall below $70-$75 per barrel, it could exert significant pressure on Kazakhstan's economy, potentially weakening the tenge. Nurgaliyev estimates the exchange rate could rise to 500 tenge per dollar, and in a deeper price slump (below $70), it could even reach 530 tenge. However, he notes that prices above $70 remain favorable, potentially allowing the tenge to strengthen due to export revenues, a higher base interest rate, and increased dollar supply.

The Most Likely Outcome: Volatility

According to Nurgaliyev, the most probable scenario is continued high volatility in oil prices. He explains that the current price fluctuations are driven more by speculative factors and geopolitical tensions, particularly between Iran and the US, rather than solely by the UAE's exit. While sharp price spikes are not expected, moderate fluctuations of 2-5% are possible, with prices likely returning to the current range of $110-$115.

Impact on OPEC and Global Markets

Nurgaliyev believes the UAE's departure stems from dissatisfaction with US policy and the effectiveness of international organizations. He suggests that while OPEC's influence currently persists, the UAE's move could prompt other members to re-evaluate their participation. This could potentially weaken internal discipline within OPEC and affect the group's ability to reach consensus. Key factors influencing the market remain the relationships between the US, Iran, Russia, and Middle Eastern countries like Saudi Arabia.

Kazakhstan's Economic Considerations

The impact of oil price fluctuations on Kazakhstan's economy is significant. Historically, rising oil prices have benefited budget revenues, the National Fund, and the tenge's exchange rate. Conversely, price drops have negative implications. While higher oil prices are generally positive for the economy, they can have mixed effects on citizens, such as reduced investment returns on pension funds due to the strengthening tenge. Market volatility also increases risks for inflation, investment activity, and financial markets, making an oil-dependent economy vulnerable to external shocks.

For planning purposes, the government has set baseline parameters for the 2026-2028 budget, assuming an oil price of $60 per barrel and an exchange rate of 540 tenge per dollar. These figures underpin calculations for export revenues, social payments, and state expenditures.

Experts suggest that internal disagreements and dissatisfaction with production quotas were the primary reasons for the UAE's withdrawal from OPEC and OPEC+. The long-term consequences for the global oil market will depend on the UAE's subsequent actions and production decisions.