• Nigeria’s $5 billion loan from Saudi Aramco stalls due to falling oil prices
• Deal tied to 100,000 barrels per day faces risk amid production constraints
• Lenders demand stronger guarantees; Nigeria eyes alternate borrowing routes

Nigeria is seeking new options to raise funding for its national budget, including a $5 billion loan agreement with Saudi Aramco, the Saudi state-owned oil company. The arrangement, initiated in 2023, was structured around projected daily oil deliveries of 100,000 barrels.

The loan was intended to strengthen Nigeria’s foreign exchange reserves and provide budgetary support, especially in key economic sectors. However, declining oil prices and ongoing structural production issues in Nigeria have slowed progress.

Brent crude, the global oil benchmark, has dropped to about $68 per barrel in recent months. This represents an 18% decline from the $80 benchmark used during the loan's initial financial projections. As a result, the deal now appears riskier for potential lenders.

Nigeria continues to struggle with sustaining oil production beyond 1.5 million barrels per day, due to various technical and logistical challenges. Nearly 300,000 barrels per day are already tied to other financial commitments, further limiting the country’s leverage in negotiating this deal.

Banks, particularly those in the Gulf and across Africa, are reportedly cautious. “It is tough to find an institution willing to commit without solid guarantees on volumes,” said a banking source involved in the talks. The viability of the loan now hinges on either Nigeria securing better market conditions or lenders adjusting their expectations in light of current risks.

Meanwhile, the Nigerian government is also reviewing a broader external borrowing plan worth $24.14 billion. This proposal, submitted by President Bola Tinubu in May 2025, is still awaiting parliamentary approval.