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The global oil market is seeing a dramatic shift, with supply reaching an all-time high in August—news that holds deep implications for African oil producers and economies dependent on petroleum exports.
According to the International Energy Agency (IEA), oil production surged to a record 106.9 million barrels per day (mbd), driven by increased output from OPEC+ members like Saudi Arabia and Russia, as well as major non-OPEC producers such as the United States, Brazil, Canada, Guyana, and Argentina.
This comes as eight key members of the OPEC+ group, which includes Angola, Nigeria, and other African producers, have been steadily ramping up production since April after years of restricted output aimed at stabilizing the market. The cartel announced yet another increase in production this past Sunday, raising eyebrows across oil-reliant economies in Africa.
While the increased output suggests recovery and growing energy demand globally, it also signals potential risks. The IEA has warned of an oversupply situation in 2025, which could keep prices low and pressure national budgets in oil-exporting African countries.
The price of Brent crude, which serves as the benchmark for many African oil producers, dropped to an average of USD 67 (roughly N$1 182) in August—USD 2 less than the previous month. This decline, although slight, reflects investor concerns that supply may continue to outpace demand.
Despite a small rise in global oil demand during August, the IEA projects a surplus in 2025, forecasting supply to grow to 105.8 mbd while demand lags behind at 103.9 mbd. By 2026, the gap is expected to widen further, with supply reaching 107.9 mbd compared to demand at 104.6 mbd.
For African oil exporters like Nigeria, Angola, Algeria, and Libya, this dynamic could strain revenues and challenge economic planning. On the other hand, oil-importing African nations may benefit from more stable or even reduced fuel prices—potentially easing inflation and lowering transport costs.
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The IEA’s monthly report notes that investor sentiment remains bearish, with fears of oversupply undermining any momentum for higher prices. As global giants dictate the pace of production and price direction, African nations—whether oil-rich or oil-reliant—will need to tread carefully, balancing economic ambitions with global market realities.
