Naira Faces Pressure as OPEC+ Raises Output by 411,000....

Samuel Mobolaji

The naira may come under renewed pressure as the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) announced a production increase of 411,000 barrels per day for July 2025, raising concerns over potential declines in oil prices—Nigeria’s key foreign exchange earner.

The decision was made during a virtual meeting on Saturday involving eight OPEC+ member countries—Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman—who reviewed global oil market dynamics and agreed to continue with their phased supply restoration strategy.

For Nigeria, the implications are far-reaching. An increase in global oil supply without a matching rise in demand typically triggers price drops, threatening government revenue and currency stability. The naira, which currently trades around N1,580–N1,590/$1 officially and N1,620/$1 on the parallel market, could weaken further amid growing fiscal and foreign exchange challenges.

OPEC+ had previously cut production by over five million barrels per day to stabilise the market, but recent adjustments reflect a shift toward cautious output recovery. The group said the latest quota hike was consistent with its earlier decision in December 2024 to begin a gradual return of 2.2 million barrels per day of voluntary cuts.

The eight participating countries affirmed their commitment to conformity with agreed targets and pledged to compensate for any overproduction dating back to January 2024. They also agreed to hold monthly reviews to monitor market conditions and adjust production plans as needed.

Analysts warn that unless global demand accelerates or inventories fall, the increased supply could put downward pressure on prices. For Nigeria, this poses a dual threat—reduced foreign earnings and a wider fiscal deficit—which may shake investor confidence and further strain the exchange rate.

Still, falling oil prices could ease domestic inflation, particularly in energy and transportation costs. For households and businesses facing high logistics expenses, lower fuel prices may offer some relief. However, the broader economic impact remains a balancing act for policymakers in a volatile global market.