Nigeria faces a tightening mix of external oil market risks and internal supply constraints after the United Arab Emirates (UAE) moved to quit the Organisation of the Petroleum Exporting Countries (OPEC), while fresh data showed domestic refiners lifted less than half of crude volumes offered in the first quarter of 2026.
In a policy advisory issued on May 5, the Chartered Risk Management Institute of Nigeria (CRMI) warned that the UAE’s planned exit from OPEC in May could unsettle global oil market coordination, with spillover effects for oil-dependent economies such as Nigeria.
The advisory, signed by CRMI Registrar and Chief Executive Officer Victor Olannye, described the move as a “landmark shift in global oil governance” that could weaken long-standing production alliances and amplify volatility in crude markets.
“The development raises the risk of reduced cohesion among major oil producers, increased price volatility and broader macroeconomic uncertainty,” Olannye said.
The UAE, a long-standing OPEC member for nearly six decades, announced in April that it would withdraw from the cartel and its wider OPEC+ framework, citing a strategic push to expand production capacity and meet rising global energy demand over the long term.
CRMI said the exit could trigger a more market-driven pricing regime, weaken OPEC’s traditional stabilising role and potentially encourage other member states to reconsider their positions, creating a contagion risk within the group.
For Nigeria, Africa’s largest crude producer, the institute noted a mixed outlook. While the country could gain from increased production flexibility and a potential rise in market share, those gains may be offset by heightened exposure to price swings, intensified competition and reduced protection from coordinated supply management.
“The Institute anticipates possible fragmentation of global oil governance structures and an acceleration of energy transition initiatives,” Olannye said, urging both public and private sector actors to reassess risk frameworks.
CRMI called on the government to strengthen fiscal buffers, accelerate economic diversification and deepen investments in renewable energy to reduce reliance on oil revenues. It also advised companies to adopt dynamic hedging strategies and broaden portfolio exposure, while urging financial institutions to improve risk disclosure and reassess energy-linked assets.
The warning comes as Nigeria continues to grapple with structural bottlenecks in its domestic oil supply chain, despite regulatory efforts to prioritise crude allocation to local refineries.
Separate data released on May 5 by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed that domestic refiners lifted only 28.5 million barrels of crude oil in the first quarter of 2026, far below the 68.7 million barrels offered by producers under the Domestic Crude Supply Obligation (DCSO) framework.
According to the commission, 61.9 million barrels were formally allocated to refiners during the quarter, but actual deliveries translated into a supply conversion rate of between 36 and 46 percent.
“The Commission has released statistics on the enforcement of the Domestic Crude Supply Obligation in accordance with the Petroleum Industry Act,” NUPRC spokesman Eniola Akinkuotu said in a statement issued in Abuja.
A breakdown of the data showed persistent gaps between supply commitments and actual deliveries. In January, producers offered 25.3 million barrels against a mandated 22.6 million barrels, yet only 9.2 million barrels were delivered. February recorded 9.1 million barrels in actual supply from 19.8 million barrels offered, while March saw a modest rise to 10.1 million barrels delivered out of 23.6 million barrels offered.
The commission attributed the shortfall largely to commercial and pricing disagreements between producers and refiners, noting that transactions under the DCSO framework operate on a “willing buyer, willing seller” basis.
“Pricing differentials have continued to influence the pace and volume of crude deliveries,” Akinkuotu said, adding that while producers have generally complied with supply targets, market conditions ultimately determine final uptake.
The DCSO, introduced under the Petroleum Industry Act of 2021, is designed to ensure adequate crude supply to domestic refineries and reduce Nigeria’s dependence on imported petroleum products. However, the latest figures highlight persistent structural and commercial frictions that continue to limit its effectiveness.
Despite the challenges, the NUPRC said it remains committed to refining the framework to improve transparency and efficiency, while sustaining gains in crude production.
“Our objective is to ensure that domestic refineries are adequately supplied in line with national energy sufficiency goals,” Akinkuotu said.