The decline in oil prices, low production threatens a loan of $ 5 billion in Saudi oil companies to Nigeria

A loan record of $ 5 billion from Aramco, a Saudi Arabian state -owned oil company, to Nigeria has been threatened by a decrease in crude oil prices and decreased production, a report has revealed.

Reuters, in a report on Tuesday, said that the decline in the price of new crude oil had caused concern among banks that are expected to support the agreement, while reduction is now being considered.

According to the report, the slow progress in talks highlighted the impact of the decline in new oil prices, mostly driven by the organization of the State of Petroleum Exporting and the Allies (OPEC+) the shift aimed at regaining the market share instead of restricting supplies, which now will require more barrels to support loans.

“Brent has dropped around 20% to around $ 65 per barrel from above $ 82 in January,” the report said.

“Lower oil prices means that Nigeria can need more barrels to support loans, but for years lack of investment to complicate its ability to meet production goals.”

The source also told Reuters that the bank involved in the discussion was expected to fund some loans with Aramco, to voiced concerns about oil delivery, which had slowed negotiations.

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“Bank Teluk and at least one African lender is involved, added them. Reuters cannot determine the identity of the bank,” he added.

Nigerian National Petroleum Company Limited (NNPC LTD) has obtained several loans supported by oil, including $ 3 billion loans from African export-import banks (Afreximbank) to support Naira and stabilize the foreign exchange market.

Tinubu Bola President, said the source, introduced the loan idea in November 2024 during his meeting with Mohammed bin Salman, Prince of the Crown and Prime Minister of Saudi Arabia, at the Saudi-African Summit in Riyadh.

However, Aramco and NNPC have refused to comment on this problem.

Officials at the Ministry of Finance or Oil Oil also maintain a closed lip on the loan agreement.

By: Babajide Okeowo