The Chartered Risk Management Institute of Nigeria (CRMI) has warned that Nigeria may face significant oil market risks following the United Arab Emirates' decision to exit the Organization of the Petroleum Exporting Countries. In a policy advisory issued on Tuesday, the institute stated that the development could trigger global oil market volatility, weaken supply coordination among producing nations, and heighten geopolitical tensions, with direct implications for Nigeria's economy.
Key Risks Outlined
The advisory, signed by CRMI Registrar and Chief Executive Officer Victor Olannye, described the UAE's exit as a landmark shift in global oil governance capable of disrupting long-standing production alliances. According to Olannye, key risks include a potential breakdown in OPEC cohesion, increased oil price volatility, energy supply chain disruptions, macroeconomic uncertainty, and the possibility of a contagion effect, with other member states considering similar exits.
UAE's Departure
The UAE announced last month that it would quit OPEC and OPEC+ groups in May after nearly 60 years of membership. The UAE stated that its decision would help meet growing global energy demand in the long term, following recent investments to boost its production capacity.
While noting that Nigeria could benefit from increased production flexibility and potential expansion in market share, the institute cautioned that such gains might be offset by exposure to unstable oil prices, reduced protection from coordinated supply management, and heightened global competition. Olannye emphasized that stakeholders must reassess their risk management frameworks and strengthen institutional resilience to navigate the evolving geo-economic landscape.
Recommendations for Stakeholders
The institute advised corporate organizations to adopt dynamic hedging strategies, diversify business portfolios, and strengthen internal risk controls. It also urged financial institutions and investors to reassess energy-related exposures, improve risk disclosure, and deepen portfolio diversification. CRMI called on the government to strengthen fiscal buffers, accelerate economic diversification, and intensify efforts toward renewable energy transition to reduce dependence on crude oil revenues. Additionally, the institute encouraged risk professionals to upskill in geopolitical risk analysis, energy economics, scenario planning, and predictive analytics to better anticipate emerging global shifts.
Potential Scenarios
The institute warned that the UAE's exit after nearly six decades of membership could weaken OPEC's traditional influence in stabilizing oil markets, potentially ushering in a more market-driven pricing regime and accelerating the global shift toward alternative energy sources. The institute anticipates possible scenarios, including fragmentation of global oil governance structures, increased market-driven oil pricing mechanisms, and acceleration of global energy transition initiatives.
