UAE leaves OPEC, a hit on Nigeria and other oil producers

The United Arab Emirates said on Tuesday it was leaving the oil producers group OPEC after being a member for nearly 60 years, a blow to the cartel group.

The decision marks one of the most significant fractures in the oil producers’ alliance in decades, with implications that could ripple through global energy markets and hit members like Nigeria.

Abu Dhabi said it will leave both OPEC and the broader OPEC+ alliance from May 1, ending nearly six decades of membership. The move comes amid an escalating Middle East energy crisis linked to the Iran war, which has disrupted oil flows and exposed internal tensions among producers.

UAE Energy Minister Suhail Mohamed al-Mazrouei said the decision followed a strategic reassessment of the country’s production ambitions. “This is a policy decision, it has been done after a careful look at current and future policies related to level of production,” he told Reuters.

The UAE, OPEC’s fourth-largest producer, has long pushed to expand output capacity but has been constrained by production quotas designed to stabilise prices. Leaving the group removes those limits, allowing it to pump more oil over time.

Analysts say the exit is a structural blow to OPEC’s cohesion. “With the UAE leaving, Opec loses about 15% of its capacity and one of its most compliant members,” Saul Kavonic of MST Financial told Reuters, describing the move as “the beginning of the end” for the alliance.

In the immediate term, the market reaction has been muted. Oil price gains were trimmed following the announcement, reflecting expectations that supply disruptions, rather than internal policy shifts, will dominate near-term pricing.

Those disruptions are tied to the Strait of Hormuz, a critical chokepoint through which roughly a fifth of global oil and gas supplies pass. Iranian threats and attacks on vessels have constrained shipments, limiting the ability of Gulf producers to increase exports even if they want to.

Mazrouei said the UAE’s exit “would not have a huge impact on the market” for now, given these constraints.

However, the longer-term outlook is more complex. Freed from quotas, the UAE is expected to increase production capacity further, potentially adding supply to the market once logistical bottlenecks ease. Economists warn this could introduce greater volatility.

The World Bank has already warned that the ongoing Middle East conflict has triggered the largest oil supply shock on record, projecting energy prices could rise by about a quarter this year.

Pressure on OPEC, including Nigeria

For OPEC, the UAE’s departure weakens its ability to act as a cohesive price manager. The cartel has historically relied on coordinated production cuts to stabilise revenues, particularly for fiscally dependent members like Nigeria.

With one of its most disciplined producers exiting, the burden of maintaining compliance and market balance will increasingly fall on heavyweight members such as Saudi Arabia.

For Nigeria, the implications are immediate and structural. Higher oil prices in the short term could boost revenues for Africa’s largest crude producer, but worsen fuel prices and inflation generally.

Increased volatility and the potential breakdown of OPEC discipline pose longer-term risks.

If more members begin to prioritise national production strategies over collective quotas, the market could shift toward a more fragmented, competitive supply environment. That would make prices less predictable, complicating fiscal planning for oil-dependent economies like Nigeria.

There is also a competitive dimension. The UAE’s ability to ramp up production once constraints ease could intensify competition for market share, particularly in Asia, where Nigeria has sought to expand its crude exports.

Beyond markets, the UAE’s exit signals a broader geopolitical realignment in global energy. The decision reflects frustration with quota constraints, uneven compliance within OPEC, and tensions exacerbated by the Iran conflict.