Nigeria's ambitious $5 billion oil-backed loan deal with Saudi Aramco has hit a snag due to a decline in global oil prices, according to Reuters.
The agreement, initially set to bolster Nigeria's economy by leveraging its oil reserves, is now delayed as both parties reassess the terms in light of the recent market downturn.
The deal was designed to provide Nigeria with much-needed liquidity, helping to stabilize its economy amid ongoing fiscal challenges.
However, the falling oil prices have complicated the financial projections and risk assessments associated with the loan, leading to a temporary hold on finalizing the agreement, Reuters reported, quoting sources familiar with the matter.
The Nigerian government had hoped the loan would support critical infrastructure projects and stimulate economic growth.
The delay comes at a challenging time, as Nigeria grapples with inflationary pressures and a volatile economic landscape.
Brent crude has fallen about 20% to $66.76 per barrel from above $82 in January. This is below Nigeria's 2025 budget benchmark of $75 a barrel.
Low oil production is also complicating matters in Nigeria. In April, the country produced 1.486 million barrels of oil per day, according to data from OPEC.
This is down from a high of 2.968 million barrels per day reached in November 2005 and below the 2025 budget projection of 2.06 million barrels.
Officials from both Nigeria and Aramco are reportedly in discussions to renegotiate terms that reflect the current market conditions.
Despite the setback, there is optimism that a revised agreement can be reached, enabling Nigeria to move forward with its economic plans.
