By Pius Mordi
When the United Arab Emirates (UAE) announced that it was withdrawing its membership of the oil cartel, the Organisation of Petroleum Exporting Countries (OPEC), effective May 1, 2026, it sent shockwaves within the organisation and international oil community.
Coming at a time the organisation was looking to have a controlled and concerted approach to stabilising the oil market following the dizzying unpredictability precipitated by the war on Iran by the United States and Israel, there is concern that it may trigger a domino effect and ultimately lead to further whittling down of OPEC’s influence or its outright disintegration.
For Nigeria, that could orchestrate an economic apocalypse given its status as the weakest link in the cartel. Unlike its peers within OPEC, Nigeria is beset by myriad of challenges that have prevented her from meeting her production quota for a long time. While the UAE is leaving principally due to frustration she has been facing over production quotas imposed by OPEC and a desire to act independently to achieve a five million barrel per day capacity by 2027, Nigeria has been unable to meet her 1.5 million barrels per day production quota.
However, UAE’s withdrawal is not the first from the organisation. Several countries have left the organization, often due to production quota disputes or to pursue independent energy policies. Before the UAE, Angola had left in 2024, Qatar (2019), Indonesia (2008), and Ecuador (2020). Gabon initially left in 1996 and rejoined in 2016.
But UAE’s withdrawal and the timing may have dealt a much heavier blow than the previous withdrawals.
Experts view the Gulf country’s withdrawal as a major blow to OPEC’s future influence, with some calling it “the beginning of the end” for the organization’s ability to effectively set global prices, particularly as it UAE’s withdrawal has cost OPEC about 15 percent of its capacity.
As a major producer with significant spare capacity, the UAE’s exit weakens OPEC’s collective bargaining power, likely leading to a structurally weaker cartel in the long term.
A collapse of OPEC, even a debilitating weakening of the organisation, would trigger lower oil prices and remove production limitations. For Nigeria, this will severely destabilize her economy by causing a dramatic loss of foreign exchange earnings.
Due to over-reliance on oil for over 75 percent of government revenue, this would worsen the depreciation of the naira, cause high inflation through its import-dependent economy and potentially cause economic recession.
While the rest of OPEC members may be able to ramp up production, Nigeria may be stuck in its poor production level.
Nigeria has consistently failed to meet its 1.5 million barrel per day (bpd) OPEC oil production quota for eight consecutive months as of March 2026, averaging roughly 1.38 mbpd in March 2026. This sustained underperformance is driven by security issues, massive and unchecked oil theft, aging infrastructure, and inadequate investment, resulting in over 18 million barrels in cumulative production deficits and over $1.3 billion in lost revenue between early 2025 and March 2026.
These issues, combined with high production costs and political challenges, hinder the country’s ability to capitalize on rising oil prices. In the event of previous slumps in prices of crude oil, Nigeria has always been vulnerable and the first of OPEC members to catch cold whenever the market sneezed.
This has earned the country to be inevitably dubbed the weakest link in the cartel’s chain.
Nigeria also faces high production costs, making it more vulnerable to lower oil prices compared to other OPEC members.
These structural problems have hindered Nigeria’s ability to act as a stable, high-output contributor to the OPEC alliance.
The test for Nigeria’s economy will come when the war in Iran ends and the blockade of the Strait of Hormuz is lifted. An oil price crash resulting from market competition, potentially below $40 per barrel, would severely damage Nigeria’s budget. With over 90 percent of foreign earnings linked to oil, the reduction in oil price or production would cripple external reserves.
As Nigerian crude extraction has high costs, a prolonged low-price environment would make much of it uncompetitive, causing lower investment in mature fields and overall production declines.
Currently, Nigeria’s economy is already stressed by the war in the Gulf, high transportation fares, and high food prices, which would be severely exacerbated by a further fall in oil prices.
The government would likely face insurmountable challenges in funding the budget, leading to increased debt, potential failure to pay salaries, and sharp reductions in public infrastructure spending.
UAE’s decision is seen as a strategic pivot to diversify its international partnerships and align with different global interests, including better relations with the US.
Successive American administrations have always pressured OPEC to whittle down its capacity to influence the international oil market. The United States and the Western world may be pleased with the rocking of OPEC as an unintended outcome of the war in Iran.
OPEC had had the coordination and unification of petroleum policies among its member to ensure stable oil markets as one of its core objectives. Its primary goals include securing fair, stable prices for producers, ensuring an efficient and regular supply to consumers, and guaranteeing a fair return on capital for investors in the oil industry.
