A post-OPEC moment calls for a UAE–Indonesia green sukuk

The United Arab Emirates’ decision to leave OPEC is not just a rupture in oil diplomacy. It is a signal that the old architecture of energy coordination—built on production quotas and cartel discipline—is giving way to something looser, more competitive, and potentially more volatile.

For Indonesia, the implications are immediate. But so is the opportunity.

Effective 1st May 2026, the UAE exited OPEC after nearly six decades, citing national interest and a reassessment of its production strategy. The move frees Abu Dhabi from output quotas that had constrained its ability to monetize expanded production capacity. It also reflects deeper tensions within the group—particularly with Saudi Arabia—and the disruptive effects of regional conflict, including the war involving Iran and instability in the Strait of Hormuz. 

The result is a weaker OPEC and a more fragmented global oil market. Analysts expect that, outside the cartel, the UAE will have both the incentive and the capacity to increase production, raising questions about who—if anyone—will stabilise supply in the years ahead.

This matters for Indonesia. Like many emerging economies, it remains exposed to swings in global energy prices and supply disruptions. Indonesian officials have already acknowledged that the UAE’s departure reflects “the evolving dynamics of global energy governance” and could affect national energy security. 

Yet the same disruption that creates risk also opens a door.

For decades, OPEC embodied a model of cooperation centered on oil—coordinating scarcity to influence prices. As that model frays, new forms of cooperation are likely to emerge, increasingly centered not on fossil fuels, but on the financing of their alternatives.

Indonesia is well positioned to lead in this space. It has established itself as a global pioneer in sovereign sukuk, including green sukuk instruments that fund climate and environmental projects. These issuances have demonstrated that Islamic finance can attract broad international participation while adhering to transparency and sustainability standards.

READ: UAE to withdraw from OPEC, OPEC+

What Indonesia lacks is scale.

That is where the UAE could come in—not as a fellow oil producer coordinating supply, but as a capital partner helping finance the transition beyond it.

The UAE’s exit from OPEC is, at its core, about autonomy: the ability to pursue its own energy and economic strategy without external constraints. That strategy includes maximizing the value of its hydrocarbon resources in the near term while positioning itself as a global financial and investment hub.

While the decision to leave OPEC is not explicitly framed as a clean-energy pivot, it does create greater flexibility in how the UAE deploys its capital and shapes its long-term economic partnerships.

A bilateral sovereign green sukuk between Indonesia and the UAE would fit squarely within this new logic.

Such an instrument could be structured around Indonesia’s renewable energy portfolio—wind, solar, and hydropower projects that require long-term, patient capital. The UAE, through its sovereign investment ecosystem, could act as a cornerstone investor, anchoring demand and signaling credibility to other Gulf and Asian investors.

The benefits would be mutual.

For Indonesia, it would unlock large-scale, Sharia-compliant financing aligned with its development and climate goals. It would also reduce vulnerability to external energy shocks by accelerating domestic renewable capacity.

READ: Saudi expert says UAE exit from OPEC to have limited impact on oil markets

For the UAE, it would provide access to high-growth infrastructure assets in one of Asia’s largest economies, while reinforcing its role as a global hub for Islamic finance and cross-border investment.

More broadly, it would represent a shift in how energy cooperation is defined.

The old model—typified by OPEC—was about managing supply among producers. The emerging model may be about mobilising capital across regions to finance the transition. One is rooted in extraction; the other in investment.

There are, of course, obstacles. Indonesia’s renewable sector still faces regulatory and pricing challenges. Currency risks and project bankability remain concerns for foreign investors. And the global sukuk market, while growing, is still relatively small compared with conventional debt markets.

But these are technical problems, not structural ones. They can be addressed through careful design, regulatory reform, and risk-sharing mechanisms.

What matters more is strategic timing.

The UAE’s departure from OPEC underscores a broader reality: the institutions that governed 20th-century energy markets are losing their coherence. In their place, a more fragmented—but also more flexible—system is emerging.

Countries that adapt early will help define it.

Indonesia should see this moment not only as a disruption to manage, but as an opening to lead. A UAE–Indonesia green sukuk partnership would not replace the old energy order overnight. But it would point toward a new one—where cooperation is measured not in barrels withheld, but in capital deployed.

The UAE has stepped outside the old system. The question is whether Indonesia can meet it there—and build something new.

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The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.