LAGOS, June 11, 2025 – Nigeria’s ambitious bid to secure a record-breaking $5 billion oil-backed loan from Saudi Aramco, the kingdom’s oil giant, is teetering on the brink as global crude prices plummet and banks grow wary of the country’s ability to deliver on its oil supply promises. The deal, poised to be Nigeria’s largest oil-backed financing and Aramco’s first major foray into such an arrangement in the West African nation, has hit a wall, threatening efforts to bolster Nigeria’s dwindling foreign exchange reserves.
Sources close to the negotiations, first reported by Reuters, reveal that the sharp 20% drop in Brent crude prices—from $82 per barrel in January to around $65 in recent weeks—has spooked potential banking partners. The decline, driven by OPEC+’s shift toward prioritizing market share over price stability, means Nigeria would need to commit significantly more oil barrels to repay the loan, raising the stakes for lenders. Gulf-based financial institutions and at least one African bank, expected to co-finance the deal, are hesitating, with one insider stating, “It’s hard to find anyone willing to underwrite it.”
The loan, part of President Bola Tinubu’s $21.5 billion external borrowing plan, was intended to inject liquidity into Nigeria’s economy, stabilize the naira, and address budget deficits. Discussions began following high-level talks at the Saudi-Africa Summit in Riyadh in November 2023, where Tinubu and Saudi Crown Prince Mohammed bin Salman laid the groundwork for deeper economic ties. However, Nigeria’s oil sector woes are casting a long shadow over the deal. With crude production languishing at 1.4 million barrels per day (bpd) in Q1 2025—well below the OPEC quota of 1.8 million bpd—concerns are mounting about Nigeria’s ability to meet the loan’s collateral requirement of at least 100,000 bpd. This is on top of the 300,000 bpd already pledged to service existing oil-backed loans with partners like Shell, Oando, and Seplat.
Compounding the issue, Nigeria’s oil industry is plagued by chronic underinvestment, rampant oil theft, and infrastructure setbacks, including a recent spill at the Trans Niger Pipeline that disrupted output. These challenges have fueled skepticism among lenders about Nigeria’s capacity to fulfill supply commitments, especially as Aramco itself grapples with a 4.6% profit dip and a 30% dividend cut in Q1 2025 due to the same global price slump.
The stalled talks are a blow to Nigeria’s economic strategy, which relies heavily on oil revenue despite efforts to diversify. Analysts warn that failure to secure the loan could exacerbate foreign exchange shortages, with reserves already under pressure. Neither Aramco nor Nigeria’s state-owned NNPC, nor the ministries of finance and petroleum, have commented publicly, leaving uncertainty over whether the deal can be salvaged or if its size will be scaled back.
As negotiations falter, the spotlight is on Nigeria’s ability to navigate its oil sector challenges and convince wary lenders that it can deliver. For now, the dream of a $5 billion lifeline from Saudi Arabia hangs in the balance, caught in the volatile tides of the global oil market.
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