The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) has approved an increase of 188,000 barrels per day (bpd) in oil production for August 2026 as part of its gradual strategy to restore previously withheld output and maintain stability in the global energy market.

The decision was reached during the alliance’s ministerial meeting, where member countries reviewed current oil market conditions, global demand trends, and supply dynamics. The production adjustment reflects OPEC+’s confidence in market fundamentals despite ongoing economic uncertainties and geopolitical developments affecting the energy sector.

Industry analysts believe the additional output could help ease supply concerns in international markets while supporting price stability. However, they note that global crude oil prices will continue to depend on factors such as economic growth, geopolitical tensions, refinery demand, and inventory levels across major consuming nations.

For Nigeria, the increased production target presents an opportunity to strengthen crude oil exports and improve foreign exchange earnings, provided domestic production remains stable and operational challenges are effectively managed. Energy experts have consistently urged investment in oil infrastructure, improved security, and enhanced production efficiency to enable the country to maximise its OPEC allocation.

The latest production adjustment comes as several producing countries continue efforts to balance supply with global demand while preventing excessive market volatility. OPEC+ has maintained that future production decisions will remain data-driven and subject to prevailing market conditions.

Market observers say the decision underscores the alliance’s commitment to ensuring a balanced oil market while supporting long-term energy security and sustainable investment across the global petroleum industry.

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These projections, outlined in the World Bank’s Global Economic Prospects report, paint a picture of cautious optimism for Africa’s largest economy as it navigates lingering domestic and global challenges.

The services sector, a consistent driver of Nigeria’s economic expansion, remains central to this growth trajectory. In 2024, the economy grew by an estimated 3.3%, fueled largely by financial and telecommunication services, which have been instrumental in offsetting weaker performances in other sectors. The World Bank attributed this uptick to key macroeconomic and fiscal reforms implemented in 2024. These reforms not only bolstered business confidence but also paved the way for revenue growth by eliminating the implicit foreign exchange subsidy through the unification of the naira’s exchange rate.

Tightened monetary policy by the Central Bank of Nigeria was another decisive factor, aimed at tackling the persistent inflation that has plagued the economy. Inflation, which had eroded purchasing power for years, is projected to decline gradually, providing a much-needed boost to consumption and economic stability. However, while monetary tightening has brought some relief, it also underscores the fragility of Nigeria’s economic framework, where structural issues continue to impede sustained recovery.

The oil sector, historically a cornerstone of Nigeria’s economy, is expected to see only modest gains in production over the forecast period. Despite this slight improvement, output will likely remain below the country’s OPEC quota. This underperformance in oil production, combined with vulnerabilities in the exchange rate and rising debt-servicing obligations, remains a key concern for policymakers and stakeholders.

The World Bank cautioned that while the projected growth figures are encouraging, per capita income growth will remain weak. This signals that the benefits of economic expansion may not be felt evenly across the population, particularly as structural challenges such as inflationary pressures and inadequate fiscal buffers persist. Rising debt costs further complicate the outlook, limiting the government’s ability to implement transformative policies or invest in critical infrastructure.

READ MORE: Experts Predict Nigeria’s Economy Will Soar by 3.5% in 2025

On a regional level, Nigeria’s economic performance continues to be pivotal for Sub-Saharan Africa. The region as a whole is forecasted to see growth accelerate from 3.2% in 2024 to 4.1% in 2025 and 4.3% in 2026. Nigeria, alongside South Africa, remains a major contributor to this trajectory. In 2024, the two largest economies in the region averaged 2.2% growth, buoyed by improved electricity supply in South Africa and higher oil production in Nigeria.

The World Bank’s projections reinforce the significance of Nigeria’s services sector, which not only accounted for 53.58% of the country’s GDP in the third quarter of 2024 but also grew by an impressive 5.19%. This underscores the sector’s rising influence in shaping the economic landscape, as services-led growth continues to outpace contributions from agriculture and industry.

Looking ahead, Nigeria’s economic prospects remain intertwined with its ability to address structural vulnerabilities, improve fiscal management, and sustain investor confidence. While the projected growth rates of 3.5% in 2025 and 3.7% in 2026 signal progress, they also highlight the pressing need for comprehensive reforms to ensure that growth translates into tangible benefits for the broader population.

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In a statement signed by Adeola Adenikinju, NES President, the association noted that while the budget appears monumental in naira, its value in dollar terms tells a different story. Using the prevailing exchange rate of N1,679/$1, the proposed budget equals $27.96 billion, marking a 17.76% drop from the 2024 budget’s $34 billion. Even at the benchmark exchange rate of N1,400/$1 used for planning, the dollar value stands at $34.14 billion, still below previous years like 2022’s $39.8 billion and 2021’s $35.66 billion.

Adenikinju criticized the N1,400/$1 benchmark rate as overly optimistic, cautioning that it does not align with fiscal and monetary realities or expert forecasts for 2025. He pointed out that global projections place the naira’s value closer to N1,750/$1 or even N1,850/$1 in a base-case scenario, driven by uncertainties in oil revenue and fluctuating forex inflows.

He suggested a revision of the oil price benchmark from $75 to $70 per barrel to account for potential price shocks. While the current oil production target of 2.06 million barrels per day seems feasible, achieving it hinges on combating oil theft and pipeline vandalism. Global dynamics, such as a projected increase in U.S. oil production and the end of OPEC+ production cuts, could push oil prices as low as $40 per barrel in 2025, underscoring the need for caution.

The proposed budget deficit of N13.8 trillion, representing 3.87% of GDP, exceeds the Fiscal Responsibility Act’s 3% ceiling. NES urged the National Assembly to review past budgets from 2021 to 2024 to better understand an acceptable deficit limit for 2025. Data from 2024 already indicate a growing deficit, which reached 7.5% of GDP by August 2024, far exceeding projections.

Capital expenditure in the 2025 budget is pegged at N7.72 trillion, representing just 16% of total spending, a far cry from the 50% benchmark recommended for developing nations. This low investment in infrastructure could limit the budget’s impact on economic growth, employment, poverty reduction, and other critical welfare metrics.

NES emphasized the need for a robust budget framework addressing key socioeconomic issues like economic growth, job creation, inflation, and poverty reduction. Adenikinju stressed that an improved business environment, bolstered by security, infrastructure development, and strong governance, could attract foreign direct investment and empower key sectors like agriculture.

As Nigeria grapples with a challenging economic landscape, the 2025 budget underscores the urgent need for reforms that balance fiscal responsibility with developmental priorities to foster sustainable growth and social welfare.

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