KEY POINTS
- Brent crude has dropped over 7% in August and could average below $60 per barrel in Q4, the EIA warns.
- U.S. oil output is projected to hit a record 13.41 million barrels per day in 2025, deepening the supply glut.
- Nigeria’s naira remains steady at N1,533/$ but could weaken if oil prices breach the $60 mark
After the U.S. Energy Information Administration (EIA) predicted that Brent crude could average below $60 a barrel in the fourth quarter, a level last observed during the pandemic’s early shock in 2020, global crude prices are once again under pressure to decline.
Brent futures, which started the month above $71.83, have already lost over 7% of their value this month and are now trading close to $66.09, down more than 11% for the year. The slide coincides with the EIA’s warning that supply growth is exceeding demand and that the decline will likely worsen in the months ahead due to rising inventories.
“The petroleum market is very uncertain,” Acting Administrator Steve Nally stated. “We expect prices to drop sharply when inventories build up quickly.”
Due to increased well productivity, the agency also predicts that U.S. crude production will hit a record 13.41 million barrels per day in 2025, further weighing down an already oversupplied market.
Rising supply eclipses fragile demand recovery
This year, Crude’s trajectory has been anything but consistent. Due to demand concerns related to tariffs, prices fell in February and March of 2025 after rising to $82.03 by mid-January from their opening price of $74.93 per barrel. After a brief upswing in April, prices experienced another selloff, closing at $63.12 at the end of the month.
While geopolitical tensions, particularly concerns that Iran could disrupt flows through the Strait of Hormuz, caused Brent to rise above $66, with Nigerian crude grades selling for more than $70, May and June brought some relief. Prior to the August reversal, prices reached $72 by July.
Analysts now caution that expectations of excess supply in the months ahead, coupled with slowing global consumption, could push Brent through the psychologically important $60 threshold, potentially triggering deeper losses.
The biggest oil producer in Africa faces both financial and exchange risks as a result of declining prices. As oil jumped above $80 in January, the naira, which had begun the year at about N1,537 to the dollar, strengthened to N1,480. However, it declined to N1,596 by the end of April due to the ensuing price decline.
By the end of June, the naira had recovered to N1,530 thanks to the Central Bank of Nigeria’s dollar sales and increased oil revenues in May and June. As of August 13, it is trading close to N1,533, which keeps it below N1,600 but leaves it open to further declines in oil prices.
Even though Nigeria has profited from OPEC+ production targets and a slight increase in crude production, a prolonged decline below $60 per barrel could put additional pressure on foreign reserves, reduce the current account surplus, and strain export earnings.
