Oredola Adeola
Professor Emeritus of Petroleum Economics, Wumi Iledare, has cautioned that Nigeria must prepare for a less reliable price umbrella from the OPEC cartel following the United Arab Emirates’ exit.
He has therefore urged the government to respond with discipline rather than dependence.
The Principal Facilitator at the FUPRE Energy Business School, Abuja, disclosed this in a chat with Advisors Reports while discussing global crude oil market dynamics, future outlook, and the implications for Nigeria within the OPEC cartel
This development comes on the sidelines of the earlier announcement by the United Arab Emirates to exit the OPEC cartel effective May 1, a move widely seen as an effort to maximise its oil assets, sidestep production constraints, and ramp up output to about 5 million barrels per day (bpd) by 2027 from roughly 3.4 million bpd currently.
Speaking further, the Professor Emeritus of Petroleum Economics revealed that the potential exit of the UAE from the OPEC points to a deeper structural shift within the cartel, driven by growing tension between expanding production capacity and existing quota constraints under the OPEC+ framework.
He explained that, from a petroleum economics perspective, countries that have invested heavily in production capacity—such as the UAE—are increasingly incentivised to prioritise volume monetisation over collective price management.
According to him, even if such an exit gains traction, the immediate impact may not be abrupt but could gradually weaken OPEC’s ability to enforce discipline through rising non-compliance among members.
Assessing the impact on Nigeria’s economy, Wumi Iledare cautioned that the risks are twofold: potential downward pressure on oil prices in a less coordinated market, and more critically, persistent domestic challenges – including production shortfalls, high operating costs, and crude losses – which limit the country’s ability to benefit even when prices are favourable.
He added that the key takeaway for Nigeria is the need to improve crude oil production efficiency and security, reduce unit costs, adopt more conservative fiscal assumptions, and accelerate gas-led diversification.
Iledare stressed that the global oil market is becoming increasingly competitive and less forgiving, noting that regardless of whether the UAE exits or not, the signal for Nigeria is clear.
Advisors Reports’ check showed that OPEC retained Nigeria’s crude oil production quota at 1.5 million barrels per day (bpd) through December 2026, even as the country continues to miss its target for several consecutive months due to persistent output disruptions, with production hovering between 1.38 million and 1.4 million bpd.
This underperformance contrasts sharply with the ambitions of President Bola Tinubu, whose administration is targeting about 1.84 million bpd (including condensates), with a medium-term goal of 2.5 million bpd and a longer-term aspiration to ramp up output to around 3 million bpd by 2030.