The UAE, one of OPEC’s largest and most capable producers with output around 3.2–3.6 million barrels per day (bpd) and significant spare capacity, cited national interests and the need for production flexibility amid the ongoing energy crisis linked to Iran-related disruptions.

This departure marks a historic fracture in the nearly 60-year-old cartel and follows precedents like Angola’s 2024 exit over quota disputes.

For Nigeria, Africa’s largest oil producer and a longtime OPEC member, the implications centre on weakened cartel cohesion, diminished pricing power, and direct pressure on revenues.

Impact on Oil Prices and OPEC Pricing Power

Free from quotas, the UAE is expected to ramp up production toward 5 million bpd. While current supply disruptions may limit the immediate effect, the added volume will exert downward pressure on prices and increase volatility in the medium to long term. Analysts point to potential declines of $5–7 per barrel once markets normalize.

More critically, the exit undermines OPEC’s core pricing power. The UAE brought meaningful spare capacity; its departure leaves Saudi Arabia carrying a heavier burden for any future production cuts needed to stabilize prices. This makes defending price levels more costly and less effective for the Kingdom.

Saudi Arabia’s Response: A Strategic Setback and Managed Rift

Saudi Arabia, OPEC’s de facto leader, regards the UAE exit as a significant blow to its influence. Riyadh has kept public reactions measured, emphasising the resilience of deep trade, investment, and logistical ties between the two economies.

Analysts note that a full economic rupture would harm both sides and is unlikely amid shared regional threats.

Behind the scenes, however, the move exposes and widens longstanding rifts over oil quotas, Yemen, Sudan, and regional influence. It forces Saudi Arabia to shoulder more of the stabilisation burden alone, weakening its ability to enforce discipline across the group.

The exit is seen as the UAE asserting autonomy and rejecting Saudi-led oil governance. A recent Gulf summit was described positively by UAE officials, indicating efforts to contain fallout.

This response highlights Saudi Arabia’s recalibration: maintaining core OPEC leadership while adapting to a less reliable alliance structure. It may push Riyadh toward more unilateral production decisions or tighter coordination with remaining compliant members.

Domino Risks and Further Erosion of Influence

Venezuela, with vast reserves and recovering output, emerges as a potential next candidate for greater independence or even exit, alongside other quota-frustrated producers.

A cascade of departures could render OPEC largely symbolic, leaving global oil prices driven primarily by market forces rather than coordinated cuts. This would likely result in a structurally lower price floor and higher volatility.

Direct Effects on Nigeria

Nigeria remains heavily dependent on oil for export earnings and government revenue. With production often falling short of its ~1.5 million bpd OPEC quota (recent figures around 1.38 million bpd amid theft, vandalism, and infrastructure issues), the country has limited ability to offset price weakness through higher volumes.

Softer prices or sustained volatility would widen fiscal deficits, pressure the naira, and complicate budgets benchmarked around $65–70 per barrel. Angola’s experience showed that quota freedom alone does not guarantee production gains when structural problems persist- Nigeria risks similar constraints. A weaker OPEC, with reduced Saudi leverage to enforce discipline, further diminishes the “price floor” protection African producers have relied upon.

In this environment, Nigeria’s longstanding challenges – upstream security, investment attraction, and economic diversification – become even more urgent. While the country has reaffirmed commitment to OPEC, the cartel’s diminishing pricing power (exacerbated by the Saudi-UAE rift) means future revenue stability cannot be taken for granted.

Outlook: Navigating a More Fragmented Oil Order

The UAE’s exit, Saudi Arabia’s measured but strained response, and the resulting erosion of OPEC cohesion signal a structural decline in the cartel’s pricing influence and a more market- driven oil era.

For Nigeria, this heightens fiscal and currency risks tied to its oil dependence while underscoring the limits of relying on collective producer power.

In the short term, elevated prices from geopolitical disruptions may provide a temporary buffer. Over the medium to long term, however, increased supply from the UAE (and potentially others) combined with weaker coordination could sustain volatility and a softer price environment. Saudi Arabia’s heavier stabilisation role may lead to more pragmatic quota adjustments or unilateral actions, but it also risks exposing fractures that smaller members like Nigeria cannot easily exploit.

Conclusion

Nigeria’s path forward requires decisive action. Upstream priorities should include intensified security operations against oil theft, accelerated infrastructure upgrades, and targeted incentives to attract investment – addressing the chronic underproduction that has left the country unable to capitalise on quota flexibility.

Downstream and diversification efforts remain critical: expanding refining capacity, developing gas resources, and growing non-oil sectors (agriculture, manufacturing, and services) will reduce vulnerability to crude price swings.

Diplomatically, Nigeria must engage actively within a diminished OPEC, potentially advocating for more flexible arrangements that reflect African producers’ realities.

Broader economic reforms, fiscal discipline, improved revenue management, and naira stability measures, will determine whether external shocks translate into crises or catalysts for resilience.

Ultimately, the Gulf realignment and OPEC’s evolution present Nigeria with both risks and opportunities. In a world where oil market power is fragmenting, proactive domestic transformation offers the most reliable route to energy security and sustainable growth.

The coming months will test whether Nigerian policymakers seize this moment or allow it to deepen existing vulnerabilities.

FirstCap Limited is a dynamic investment banking and capital markets advisory firm, and a subsidiary of FirstHoldCo Plc, one of Africa’s most resilient and trusted financial institutions.

With over two decades of experience delivering tailored financial solutions that drive growth, transformation, and long-term value. Our core expertise spans mergers and acquisitions, capital raising, and strategic financial advisory. Backed by a proven record of landmark transactions across multiple sectors, We are a trusted partner of choice for corporations, institutions, and entrepreneurs navigating complex financial landscapes.

Financial Highlights for Q1 2026

Recall, the Holding Company recorded a steep decline in earnings in its 2025 full-year results triggered by heavy impairment charges linked to delinquent loans in the oil and gas sector.

The bank reported a profit before tax of N321.1 billion in the first quarter ended March 31, 2026, representing a 72.2 per cent increase from N186.5 billion recorded in the corresponding period of 2025. Profit after tax rose by 56.5 per cent to N267.8 billion, while gross earnings climbed by 26.8 per cent to N942 billion.

The strong quarterly performance comes months after the group’s 2025 audited results showed a significant erosion in profitability despite growth in core earnings. Profit before tax for the 2025 financial year fell by 70.5 per cent to N235 billion from N796.5 billion in 2024, while profit after tax declined by 79.4 per cent to N139.5 billion.

The decline was largely driven by a 93.8 per cent increase in impairment charges, which rose to N826.3 billion in 2025 from N426.3 billion in the previous year, alongside the moderation of foreign exchange gains recorded in earlier periods.

Despite the pressure on bottom-line performance, the group maintained strong revenue growth during the year. Gross earnings rose by 6.9 per cent to N3.4 trillion, supported by a 24.9 per cent increase in interest income to N2.99 trillion and a 36.8 per cent growth in net interest income to N1.92 trillion.

However, non-interest income fell sharply by 50 per cent to N377.4 billion, while operating expenses increased by 32.1 per cent to N1.23 trillion amid inflationary pressures, rising personnel costs and higher regulatory and administrative expenses. The bank’s cost-to-income ratio worsened to 53.8 per cent from 43.3 per cent in 2024.

Asset quality also weakened during the year as the non-performing loan ratio rose to 12 per cent from 10.2 per cent in 2024, reflecting stress exposures in the oil and gas sector.

Nonetheless, the group significantly improved its non-performing loans (NPL) coverage ratio to 98.7 per cent from 54.8 per cent, indicating stronger provisioning against troubled assets.

In the first quarter of 2026, the bank sustained the clean-up exercise while returning to stronger profitability. Impairment charges rose marginally by 8.3 per cent to N40.4 billion, while non-interest income more than doubled to N219.2 billion, helping operating income rise by 40.2 per cent to N658 billion.

The bank’s loan book expanded by 5.3 per cent to N9.44 trillion in Q1 2026, although customer deposits declined by 2.7 per cent to N18.38 trillion from the 2025 year-end position. Total assets also slipped slightly by 1.4 per cent to N26.88 trillion.

Non-performing loans rose further to 13.4 per cent in Q1 2026, while NPL coverage moderated to 89.4 per cent from 98.7 per cent at the end of 2025.

Commenting on the results, Wale Oyedeji, group managing director, said the bank’s first-quarter performance reflected the resilience of its franchise and the benefits of measures taken in 2025 to de-risk the balance sheet.

He said the group had made notable progress in recoveries from delinquent borrowers, especially in the oil and gas segment, disclosing that about N19 billion was recovered in the first quarter of 2026.

According to him, the group remains focused on strengthening earnings quality, improving operational efficiency, enhancing governance standards and sustaining prudent risk management.

FirstHoldCo also said it continued to strengthen its capital base in line with the Central Bank of Nigeria’s new minimum capital requirements for banks. The group disclosed that it had raised N128.7 billion so far under its N350 billion capital raising programme aimed at meeting the N500 billion regulatory threshold for FirstBank.

The commercial banking segment remained the major contributor to earnings, generating N897.1 billion in gross earnings in Q1 2026, up 23.8 per cent year-on-year, while profit before tax rose by 71 per cent to N285.8 billion.

Meanwhile, its Investment Banking and Asset Management business recorded a 36.9 per cent increase in gross earnings to N22.9 billion, although profit before tax declined by 7.3 per cent to N14.8 billion.

Business Groups:

Commercial Banking

• Gross earnings of ₦1 billion up 23.8% y-o-y (Mar 2025: ₦724.5 billion)
• Net interest income of ₦3 billion, up 21.3% y-o-y (Mar 2025: ₦356.5 billion)
• Non-interest income of ₦2 billion, up 93.8% y-o-y (Mar 2025: ₦97.1 billion)
• Operating expenses of ₦7 billion, up 21.2% y-o-y (Mar 2025: ₦241.4 billion)
• Profit before tax of ₦8 billion, up 71.0% y-o-y (Mar 2025: ₦167.2 billion)
• Profit after tax of ₦7 billion, up 56.7% y-o-y (Mar 2025: ₦151.0 billion)
• Total assets of ₦1 trillion, down 2.0% y-t-d (Dec 2025: ₦26.7 trillion)
• Customers’ loans and advances (net) of ₦4 trillion, up 5.3% y-t-d (Dec 2025: ₦9.0 trillion)
• Customers’ deposits of ₦4 trillion, down 2.6% y-t-d (Dec 2025: ₦18.9 trillion)

Investment Banking & Asset Management (IBAM)

• Gross earnings of ₦22.9 billion, up 36.9% y-o-y (Mar 2025: ₦16.8 billion)
• Profit before tax of ₦14.8 billion, down -7.3% y-o-y (Mar 2025: ₦16.0 billion)
• Total assets of ₦548.9 billion, up 2.5% y-t-d (Dec 2025: ₦535.3 billion)