The planned exit of the United Arab Emirates (UAE) from the Organisation of the Petroleum Exporting Countries (OPEC) is stirring fresh concerns among energy experts, who warn that the development may weaken the cartel’s influence on global oil prices and ultimately hurt Nigeria’s revenue outlook.
The UAE’s withdrawal, effective May 1, 2026, is expected to take about 1.2 billion barrels of annual crude production outside OPEC’s coordinated supply framework, marking one of the most significant shifts in the oil alliance in decades.
While the development has been framed in some quarters as an opportunity for Nigeria to capture additional market share, analysts say the reality may be far less optimistic, as the exit could trigger price instability and expose structural weaknesses in Nigeria’s oil sector.
Data obtained showed that the UAE produced an average of 3.36 million barrels per day in 2025, accounting for roughly 12 per cent of OPEC’s total output. Its departure effectively removes one of the cartel’s most disciplined producers from the quota system.
Commenting in separate interviews on Wednesday, experts warned that the UAE’s exit from OPEC could weaken the cartel’s price control, trigger lower crude prices, and ultimately leave Nigeria worse off despite any potential increase in production quota.
Energy economist and Professor Emeritus of Petroleum Economics, Wumi Iledare, said the move points to deeper cracks within the alliance and signals a more competitive global oil market.
In a note titled “OPEC Cohesion Under Strain: A Note for Nigeria,” Iledare stated, “The current speculation around a possible UAE exit from OPEC, whether confirmed or not, points to a deeper structural issue: growing tension between expanded production capacity and quota constraints within OPEC+.
“From a petroleum economics perspective, countries that have invested heavily in capacity, like the UAE, face a clear incentive to prioritise volume monetisation over collective price management. If this trend strengthens, OPEC’s ability to enforce discipline may gradually weaken—not abruptly, but through rising non-compliance.”
He warned that Nigeria faces a dual risk in the evolving market. “For Nigeria, the risk is twofold. First, potential downward pressure on oil prices in a less coordinated market. Second, and more critical, our domestic underperformance—production shortfalls, high costs, and leakages—limits our ability to benefit even when prices are favourable,” he added.
According to him, the country must prepare for a future where OPEC’s price-shielding role becomes less reliable. “The policy takeaway is straightforward: Nigeria must prepare for a less reliable OPEC price umbrella. This means improving production efficiency and security, reducing unit costs, adopting more conservative fiscal assumptions, and accelerating gas-led diversification.
“Whether or not the UAE exits (OPEC), the signal is clear: the global oil market is becoming more competitive and less forgiving. Nigeria must respond with discipline, not dependence,” Iledare said.
Also speaking, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, said the UAE’s exit is more likely to disadvantage Nigeria than benefit it. “I think the exit of the UAE from OPEC is even likely to be a disadvantage for Nigeria. That’s the way I am looking at it,” Yusuf said.
“The objective of OPEC is to ensure that we have a good price, so that we can get good revenue, because OPEC is a cartel that influences supply and price. Now that a major member has left, their capacity to wield that influence has diminished. That means the UAE is now free to sell as much crude as it wants to the market, which may lead to a reduction in price and in the power of OPEC to influence price.”
He added that even if Nigeria receives a higher production quota, the benefits could be wiped out by falling prices. “We can have more quota, but the price may be lower, because the function that OPEC plays is to stabilise prices. If prices are going down, OPEC can reduce supply. But now the organisation is weaker. So that is my perspective on the issue. The exit of the UAE is likely to be more of a disadvantage than an advantage. It may weaken oil prices,” he said.
Yusuf warned that Nigeria could face a worst-case scenario if it fails to improve output. “If the price is not strong enough because OPEC is now weaker and output is still not there, that is a double tragedy for the country,” he stated.
He urged the government to focus on boosting production and reducing reliance on crude exports. “For Nigeria, what the government can do is to improve our output so that even if the price is not strong enough and our output is okay, at least we would still have enough.
“Beyond that, we should depend less on crude oil. We should diversify our economy and export more refined products. That would give us more returns than exporting raw crude,” he added.
On the global stage, Head of Energy Research at MST Financial, Saul Kavonic, warned that the UAE’s decision could signal a broader breakdown within OPEC+.
“This could mark the beginning of the end for OPEC as we know it. With the UAE leaving, the organisation is effectively losing about 15 per cent of its capacity, along with one of its most disciplined and reliable producers. That raises serious concerns about the group’s ability to maintain cohesion and enforce production targets going forward,” he said.
The UAE, which joined OPEC in 1967, said its decision followed a comprehensive review of its production strategy and future energy outlook. In a statement issued by its Ministry of Energy and Infrastructure, the country said, “This decision reflects the UAE’s long-term strategic and economic vision and evolving energy profile, including accelerated investment in domestic energy production.
“It reinforces its commitment to a responsible, reliable, and forward-looking role in global energy markets.”
The ministry added that the move was driven by national interest and the need for greater flexibility in responding to market conditions. The exit comes amid rising geopolitical tensions in the Middle East, particularly around the Strait of Hormuz, a key global oil transit route, where disruptions have heightened concerns about supply volatility.
Despite these tensions, the UAE maintained that it would continue to supply oil responsibly while gradually increasing production based on market demand.
For Nigeria, however, the bigger concern remains its ability to respond effectively. The country has consistently struggled to meet its OPEC quota due to oil theft, pipeline vandalism, and underinvestment. Industry data also shows that OPEC+’s share of global oil supply has already declined, dropping to about 44 per cent in March from 48 per cent in February, underscoring weakening control over the market.
Founded in 1960, OPEC has historically played a central role in stabilising oil prices through coordinated production cuts. But internal disagreements, shifting national priorities, and the global energy transition have increasingly tested the alliance.
The UAE’s exit now amplifies those pressures, raising a critical question for Nigeria: whether it can adapt quickly enough to survive in a more volatile and less coordinated oil market.
For now, experts say the answer will depend less on global developments and more on Nigeria’s ability to fix its long-standing production challenges and reduce its dependence on crude oil revenues.
The PUNCH