Nigeria and state-owned energy giant Aramco are struggling to finalize a record USD 5 bn oil-backed loan agreement, in what would be the country’s largest ever oil-backed loan, Reuters reports, citing four unnamed sources. The agreement is slowing on the back of a recent decline in crude oil prices, which has sparked concerns among banks that were expected to participate in the agreement, the sources told the newswire.

The banks — which reportedly include Gulf banks and at least one African lender — are expected to fund part of the loan along with Aramco. “It’s hard to find anyone to underwrite it,” one source told Reuters, citing concerns over the availability of the cargoes

A USD 5 bn loan would need to be backed by at least 100k bbl / d, the sources said. NPPC — Nigeria’s state-owned oil company — is already using some 300k bbl / d to repay other oil-backed loans. The amount of oil used to pay the loans are fixed, which means lower crude prices would increase the time necessary for repayment.

This would be the Kingdom’s largest scale of participation in Nigeria’s economy so far, but the recent decline in oil prices could lessen the size of the agreement, the sources said. The loan agreement was first put on the table by Nigerian president Bola Tinubu back in November during a meeting with Crown Prince Mohammed bin Salman in Riyadh at the Saudi-African Summit, two of the sources said.

IN CONTEXT- In early April, Opec+ announced a long-delayed plan to gradually return 2.2mn bbl / d of oil to the market over 18 months, and then proceeded to accelerate these output hikes at triple the initially expected rate, with that last hike agreed on the group’s meeting late last month. Goldman Sachs then expected Brent crude to average USD 63 a barrel for the remainder of 2025, before dropping further to USD 58 in 2026, with JP Morgan showing similar forecasts for prices potentially sinking to the “high USD 50s” later this year.

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