The decision by OPEC+ to increase oil output by an additional 137,000 barrels per day (bpd) in October 2025 reflects a nuanced shift in global oil market management.
For Nigeria, a member of OPEC, this move has significant implications for production and the economy.
Pinnacle Daily reports that the group, which includes OPEC members plus Russia and allies, plans to raise output by 137,000 barrels per day, starting from October this year. However, the figure is far below the earlier monthly increases of about 555,000 bpd for September and August and 411,000 bpd in July and June.
The resolution, which was reached during a virtual meeting of OPEC members on Sunday, means that OPEC+ has begun to unwind a second tranche of cutbacks of approximately 1.65 million bpd by eight members, more than a year ahead of schedule. Since April, the firm has entirely unwound the first tranche of 2.5 million bpd, which represents around 2.4 per cent of world demand.
“The 1.65 million barrels per day may be returned in part or in full, subject to evolving market conditions and in a gradual manner,” OPEC stated.
The oil group stressed that market conditions would determine the unwinding and that if necessary, it might even suspend or reverse previous hikes.
The cartel’s latest decision came amid mounting concerns that, as the northern hemisphere’s summer driving season comes to an end, the oil market may see a significant surplus of supplies.
READ ALSO: Oil Prices Rise as OPEC+ Output Hike Seen Modest
Also, concerns about a potential supply glut are predicated on rising output in the US, Canada, Brazil and Guyana, and declining consumption in China, which has been driving demand growth for decades.
Implications for Nigeria’s economy
Crude oil export has remained the major source (about 80 per cent) of foreign exchange earnings for Nigeria. The country’s 2025 budget has an assumption of a 2.06 million per day production target and a $75 per barrel price benchmark. While these targets are yet to be achieved with nine months already gone in the year, there are concerns that the latest OPEC decision could further strain the economy.
Data released so far this year shows that Nigeria’s output level is still below the production target in the budget.
READ ALSO: Nigerians Quit Jobs Over Soaring Transport, Inflation
Latest OPEC data on Nigeria’s oil output shows that it dropped to 1.434 million barrels per day (bpd) in August 2025, down by approximately 73,000 bpd from 1.507 million bpd in July. The August production figure fell below Nigeria’s allocation of 1.5 million bpd by OPEC. This is after exceeding the quota three times earlier this year (January, June and July).
Also, oil prices have been hovering around $70 and $60 a barrel this year. As of Friday, 12 September, Brent Crude sold for $66.99 a barrel, while U.S. West Texas Intermediate sold for $62.69 a barrel.
The drop in output and price has serious consequences for Nigeria’s economy, as oil accounts for 80 per cent of the country’s foreign exchange and at least half of the government’s revenue.
The phased unwinding of cuts (originally part of a 1.65 million bpd reduction) fuels concerns about oversupply, potentially depressing prices.
The primary factors contributing to the production drop include crude theft, pipeline vandalism in the Niger Delta region, operational problems at some oil terminals and infrastructural challenges.
If the fall in oil prices is sustained, Nigeria’s oil-dependent budget could face shortfalls, exacerbating fiscal deficits and currency instability.
Manager of Economic Research at Financial Derivatives Company (FDC), Dumebi Oluwole, said based on the current market dynamics, the firm forecasts that oil prices will keep declining and could fall to $60 a barrel before the end of the year.
JP Morgan says it expects oil prices to drop to about $55 a barrel.
“These show there are concerns in terms of how Nigeria’s revenue could play out,” Oluwole stated when she featured on Channels Television’s Business Morning programme.
However, an energy expert, Ikechukwu Okafor, expressed optimism that Nigeria would sustain an increase in crude oil production and hit the two million bpd target if OPEC approves a higher quota. According to him, this can be achieved as issues of insecurity in oil-producing areas, which over the years have limited production, have been reduced.
Nigeria has lobbied OPEC for a higher quota, targeting two million barrels per day by 2027.
“We can meet the crude oil target if OPEC increases our quota. We are already exceeding it a little with the additional condensate we are producing. It will be nice to meet it, but we are constrained by OPEC,” Okafor stated in an interview with Pinnacle Daily.
Financial expert Kalu Aja said the government has continued to deploy the tactics of proposing an unrealistic estimate of revenue in the budget (oil output and oil prices) and then later borrowing.
Victor Ezeja is a passionate journalist, scholar and analyst of socioeconomic issues in Nigeria and Africa. He is skilled in energy reporting, business and economy, and holds a master's degree in mass communication.
