The Federal Government and Saudi oil company Aramco are having trouble coming to an agreement after the recent drop in crude prices, and a new $5 billion crude-for-loan deal has stalled.
A report by Reuters quoting four sources on Tuesday stated that the deal hit a brick wall after fresh market indices and a recent decline in crude prices sparked concern among banks that were expected to back the deal.
It said the facility would be Nigeria’s largest oil-backed loan to date and Saudi Arabia’s first participation of this scale in the country, although the decline in oil price could shrink the size of the deal, the report stated.
Major oil benchmarks continue to hover above the $60 range after a significant selloff in early April, over OPEC+’s announcement to increase the unwinding of voluntary production cuts totalling 2.2 million barrels per day, and renewed concerns over President Donald Trump’s trade war rhetoric impacting hydrocarbon markets.
Eight OPEC+ countries have agreed to steadily increase output through at least July, at a pace of 410,000 barrels per month. However, Nigeria’s oil revenue is currently on the rise as market data revealed that Nigeria’s crude oil blend, Bonny Light, traded at $78 per barrel.
According to two sources, President Bola Tinubu initiated discussion on the loan in November when he met with Saudi Crown Prince Mohammed bin Salman in Riyadh at the Saudi-African Summit.
The slow progress in discussions reflects the strain of the recent oil price drop, caused largely by a shift in OPEC+ policy to regain market share rather than curtail supply. Brent has fallen about 20 per cent to around $65 per barrel from above $82 in January.
