True to their promise, the Organization of the Petroleum Exporting Countries and its allies (OPEC+), the world’s largest group of oil producers, on Saturday announced a 411,000 barrels per day production increase for July 2025, as they continue to explore ways of managing 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.
Some analysts say the new 411,000 barrels per day quota by OPEC+ could exert pressure on the fragile exchange rate market as oil production increase could result in lower prices, with the attendant poor market showing by the local currency, Naira.
Specifically, the reduction in oil revenue, the country’s major foreign exchange earner, will further put pressure on the local currency that has experienced significant volatility in recent times.
The implication, according to the analysts, is that 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, prices could help ease inflationary pressures, particularly through reduced energy and transportation costs.
This is because, 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.
Last month, the naira traded between N1,580 and 1590/$1 on the official window, while it has been hovering between N1620 and N1650/$1 on the parallel market.
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Also, broad money supply rose to a record N119.11tn in April 2025, reflecting one of the sharpest monthly expansions in recent quarters, according to data from the Central Bank of Nigeria.
The figure represents a 22.9 per cent increase from N96.97tn recorded in April 2024 and a 4.3 per cent rise from N114.22tn in March 2025.
The rise in money supply comes amid the CBN’s decision to maintain a tight monetary policy stance, with the Monetary Policy Committee leaving the Monetary Policy Rate unchanged at 27.5 per cent in its May 2025 meeting, pausing a string of rate hikes for the second time this year.
Although headline inflation eased marginally to 23.71 per cent in April from 24.23 per cent in March, the continued rise in liquidity could undermine recent gains in price moderation if not closely managed.
CBN had attributed the increase to stronger foreign exchange inflows, which may have been supported by crude oil receipts, remittances, and multilateral funding. The bank’s ongoing reforms in the foreign exchange market and improved dollar liquidity also appear to have contributed to the rise in external reserves.
But, contrary may be the case as OPEC + decides to increase the Quota and more worrisome, should it be prolonged.
