Global oil markets are bracing for a fresh wave of volatility as analysts warn that crude prices could tumble below $60 per barrel by the end of 2025.
This comes as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) begin to unwind key production cuts introduced over the past two years to stabilize prices during market turbulence.
On Sunday, eight of the world’s leading oil producers, including Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman, officially began rolling back part of the 1.65 million barrels per day (bpd) in cuts announced in April 2023.
The group confirmed that 137,000 bpd will be returned to the market in October, citing steady economic conditions and relatively low global inventories as justification.
While the move is relatively modest, energy analysts predict a significant ripple effect in the coming months.
According to Fereidun Fesharaki, chairman emeritus at FGE NexantECA, the decision could trigger an oversupply that drags crude into the mid-$50s range by early 2026.
“I would say below $60 in the first quarter of next year is possible. Mid-$50s is definitely possible, and that will have a big impact on US shale production,” Fesharaki told Bloomberg Television.
He noted that while markets have not yet felt the full impact of the unwinding, the shift could accelerate if global inventories begin to build up faster than expected.
Already, Wall Street consensus is leaning towards bearish forecasts, with many analysts projecting prices under $60 before the year closes.
The expected downturn is tied to a confluence of market forces. Summer demand for crude oil, particularly from Asia and the United States, is now at its peak.
As the fourth quarter approaches, consumption typically slows, especially with industrial and travel activities tapering off after seasonal highs.
Meanwhile, rising production levels could overwhelm demand, creating an imbalance that pressures prices downward.
Early Monday, oil rose 1.6 percent in Asian trading, reflecting investor relief that OPEC’s rollback was smaller than anticipated.
However, traders remain cautious, fearing that deeper cuts could be reversed faster if markets remain resilient.
“If prices don’t drop too much, the group could be emboldened to accelerate the unwinding of the cuts,” Fesharaki explained, referencing OPEC’s earlier decision this year to release 2.2 million bpd back into the market.
For Nigeria, Africa’s largest crude producer and a key OPEC member, the looming price decline carries mixed implications.
The country has struggled to meet its OPEC quota in recent years due to pipeline vandalism, oil theft, and underinvestment in production infrastructure.
Yet, lower prices could further strain Nigeria’s fiscal balance, as crude oil accounts for 70 percent of government revenue and 90 percent of foreign exchange earnings.
In June, Nigeria exceeded its OPEC quota by four percent, a rare boost for its production outlook. However, should prices plunge to the mid-$50s, the windfall would be short-lived.
Economists warn that the government’s 2025 budget projections, based on a benchmark oil price of around $77 per barrel, could face significant shortfalls.
“This kind of price environment would severely test Nigeria’s fiscal resilience,” said Dr. Chika Okafor, an energy economist in Lagos.
“We may see renewed pressure on the naira, wider budget deficits, and rising debt servicing costs unless non-oil revenues are aggressively pursued.”
Beyond Nigeria, falling oil prices would reshape global energy politics. Cheaper oil could pressure U.S. shale producers, many of whom rely on prices above $60 to remain profitable.
A slowdown in shale output could, however, set the stage for a rebound later in 2026, as supply constraints eventually tighten the market again.
In the short term, consumers may welcome relief at the pump, especially in import-dependent countries.
But for oil-exporting economies, the shift underscores the vulnerability of overreliance on crude.
For now, OPEC+ insists its decisions are based on maintaining market stability. The group argues that the global economy remains resilient despite slowing growth in China and Europe.
Still, analysts remain cautious, warning that oversupply could push the market into a turbulent cycle of price drops followed by aggressive corrective actions in the future.
As investors await the group’s next meeting, one thing is clear: the oil market is entering a period of uncertainty, and the race to balance supply and demand will define price movements well into 2026.
