The Organization of the Petroleum Exporting Countries and its allies (OPEC+), the world’s largest group of oil producers, has announced a 411,000 barrels per day production increase for July 2025, reinforcing its strategy to manage supply dynamics and safeguard market share.
The decision was reached during a virtual meeting on Saturday, where eight OPEC+ member countries comprising Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman reviewed global market conditions and economic forecasts.
This could have a significant effect on the Nigerian naira as an increase in oil production often leads to lower oil prices, which often affects exchange rate stability.
OPEC+ has spent years curbing oil production, reducing global output by over 5 million barrels per day (bpd), or 5% of global demand, to stabilize prices and counter market volatility.
Strategic Production Adjustments
However, recent months have seen a gradual increase in output, with a modest rise in April, followed by a tripling of production adjustments for May, June, and now July.
In an official statement, OPEC+ affirmed its position, “In view of a steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories, and in accordance with the decision agreed upon on December 5, 2024, to start a gradual and flexible return of the 2.2 million barrels per day voluntary adjustments starting from April 1, 2025, the eight participating countries will implement a production adjustment of 411 thousand barrels per day in July 2025 from the June 2025 required production level.”
Market Flexibility and Future Strategy
OPEC+ emphasized that while production increases will continue, they remain subject to market fluctuations and could be paused or reversed if necessary, ensuring stability and adaptability in response to evolving global demand.
The statement further noted that these adjustments provide an opportunity for member countries to accelerate compensation measures for past overproduction.
“The eight countries reiterated their collective commitment to achieve full conformity with the Declaration of Cooperation, including the additional voluntary production adjustments that were agreed to be monitored by the JMMC during its 53rd meeting held on April 3, 2024,” OPEC+ confirmed.
Additionally, the participating nations reaffirmed their intention to fully compensate for any excess output since January 2024 and committed to holding monthly meetings to continuously assess market conditions, conformity, and compensation strategies.
What this means
According to Nairametrics’ research, the planned production increase of 411,000 barrels per day by OPEC+ could weigh on global oil prices, especially if demand growth underperforms or if inventories remain stable.
- A decline in oil prices, Nigeria’s primary foreign exchange earner, would apply additional pressure on the naira, which has already experienced significant volatility in recent months.
- As of late May 2025, the naira traded at N1,580-1590/$1 on the official window and hovered around N1,620/$1 on the parallel market, according to data tracked by Nairametrics.
- Any prolonged dip in crude oil revenues could widen Nigeria’s fiscal deficit and weaken investor confidence in the FX market, exacerbating the currency’s fragility.
- However, on the flip side, lower oil prices could help ease inflationary pressures, particularly through reduced energy and transportation costs.
For a country like Nigeria, where diesel and fuel prices significantly influence food logistics and consumer goods distribution, a drop in global oil prices could translate to some relief for households and businesses already grappling with high living costs.
