The Organization of the Petroleum Exporting Countries and its allies (OPEC+) has announced an increase in oil production by 411,000 barrels per day for July 2025. This decision is a strategic move aimed at managing supply dynamics and safeguarding market share.
During a virtual meeting on Saturday, representatives from eight member countries—including Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman—conducted a thorough analysis of current global market conditions and economic projections.
This increase in production is expected to put downward pressure on oil prices, which may significantly affect the stability of the Nigerian naira, as changes in oil revenue influence exchange rates.
OPEC+ has dedicated several years to implementing production cuts, successfully lowering global output by more than 5 million barrels per day (bpd), which is about 5% of global demand, in a unified effort to stabilize prices and tackle market volatility.
However, in recent months, there has been a slow rise in output, starting with a slight increase in April, followed by a tripling of production adjustments for May, June, and now July.
In an official statement, OPEC+ affirmed its position, saying, “Considering a steady global economic outlook and the current strong market fundamentals, as shown by low oil inventories, and in line with the decision made on December 5, 2024, to begin a gradual and flexible return of the 2.2 million barrels per day voluntary adjustments starting from April 1, 2025, the eight participating nations will implement a production adjustment of 411 thousand barrels per day in July 2025 from the required production level of June 2025.”
Market Flexibility and Future Strategy
OPEC+ has announced that although production will continue to rise, the extent of this increase will be contingent upon market fluctuations. Adjustments or pauses may occur as necessary to maintain stability and adaptability in response to the evolving global demands.
The statement also mentioned that these changes give member countries a chance to speed up compensation plans for past overproduction.
Also, the eight nations reaffirmed their commitment to achieving complete adherence to the Declaration of Cooperation, which includes the voluntary production adjustments that were agreed upon and will be monitored by the JMMC during its 53rd meeting held on April 3, 2024.
Moreover, the participating countries reaffirmed their dedication to fully compensating for any excess output since January 2024 and pledged to conduct monthly meetings to continuously evaluate market conditions, conformity, and compensation strategies.
What this means
Recent research suggests that a planned increase in oil production by OPEC+ could lead to lower global oil prices. The situation regarding oil demand and supply is critical for Nigeria’s economic outlook. If the demand for oil does not meet expectations or if oil supplies remain stable, a decline in oil prices could have detrimental effects on the country’s economy. As oil constitutes the main source of revenue for Nigeria, falling prices may lead to a budget deficit.
With official market values of N1,580-1590 per $1 and about N1,620 in the parallel market as of late May 2025, the Nigerian currency, the value of the naira, has been quite erratic. Decreasing oil revenues may heighten concerns among investors, potentially exacerbating the naira’s devaluation.
In contrast, declining oil prices could exert a favorable influence on inflation rates. In Nigeria, where fluctuations in fuel prices significantly affect food prices and transportation costs, lower oil prices may alleviate some financial pressures for households and businesses contending with elevated living expenses. This potential decrease in fuel costs could lead to a broader reduction in overall inflation, benefiting the economy.
