UAE’s exit from OPEC
Tuesday, April 28, the United Arab Emirates, UAE, served notice of termination of its 60-year membership of the Organisation of Petroleum Exporting Countries, (OPEC), effective May 1. It anchored the
- Lessons for Nigeria
Tuesday, April 28, the United Arab Emirates, UAE, served notice of termination of its 60-year membership of the Organisation of Petroleum Exporting Countries, (OPEC), effective May 1. It anchored the decision on its need to “meet growing global energy demand in the long term after recent investments to boost its production capacity”.
To start with, departures are certainly not new to OPEC. In 2024, Angola similarly withdrew. Before Angola were Qatar (2019), Indonesia (2009/2016), Gabon (1995) and Ecuador (1992).
With minor exceptions, the underlying issues would appear the same: desire for greater flexibility in determining production levels. In this particular instance, UAE had over the years spent billions of dollars building production capacity but which OPEC, in its bid to stabilise global crude prices, has not reflected.
With production at nearly five million bpd, its quota still hovers around 3.5 bpd mark. As if that is not unsettling enough, the tensions in the Gulf have since added another layer to the problem. Its oil revenues in particular, (no thanks to the closure of the Straits of Hormuz), have declined amid logistical challenges just as non-oil sectors, particularly tourism and financial services—have experienced heightened volatility. And with the country’s barely hidden desire for strategic realignment with Washington, the exit would seem rational; the perfect and legitimate decision to take – in the face of rapidly changing geopolitics.
Contrast the above with our country, Nigeria – a country plagued by inherent disruptions of the kind that have rendered the issue of quotas essentially inoperable. In fact, the issues are still somewhat academic. Really, Nigeria’s current quota under the OPEC framework is set at 1.5 million barrels per day (bpd); even at that, the best the country could do as of March was 1.38 million bpd – a situation due chiefly to technical constraints, theft, and security issues.
Ironically, the 2026 budget actually sets the production benchmark at 1.84 million bpd (including condensates).
Nigeria’s circumstances are therefore vastly different. Ours is essentially about ramping up production, improving operational efficiency and addressing those internal factors that have constrained production, thus denying the country of the manifold benefits of the God-given resource, more than anything else.
These issues have pretty little to do with OPEC or its restrictive quota.
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The other imperative, which Nigerians consider far greater and perhaps more urgent than production cutbacks, is ensuring value maximisation at the downstream sector of the oil industry. Thanks to Dangote Refinery, Nigerians have begun to reap the fruits of domestic refining in terms of product availability and foreign exchange conservation, both of which in recent past constituted great headaches for the economy.
What Nigerians need to see is more of such investments coming on-stream as part of our energy security strategy. With a fantastic natural harbour, there is no reason why Nigeria should not be a global refining hub. That quest should, in fact, constitute Nigeria’s next priority.
That goal is certainly worth pursuing, far more than our continuing membership of a body whose relevance to us at this time is questionable.
Still, while the debate about Nigeria’s continuing membership of the cartel would remain open, we cannot in good conscience deny that OPEC has, over the years, been a force for good, either in terms of ensuring a measure of discipline among the members of the producer cartel, or in the stabilisation of product prices globally.
Surely, the world knows those countries whose interests, being contrary to the ideals behind the founding of OPEC, could not wait to see it dismantled. In fact, left to the United States president, Donald Trump, the cartel would have long ceased to operate even at the risk of leaving crude prices locked in a permanent motion of instability.
The main lesson of UAE’s exit from OPEC, particularly at this time, is that nothing good lasts forever. Indeed, if we are to offer any counsel, it is for the remaining members to refrain from precipitate actions – lest they throw the baby away with the bathwater. What the current situation demands of OPEC is reformation.
