Negotiations between Saudi Aramco and the Nigerian government over a $5 billion oil-backed loan have slowed due to a decline in global crude prices, according to sources cited by Reuters.

The proposed loan would be the largest oil-backed financing Nigeria has sought and represents Saudi Arabia’s most significant financial engagement with the West African OPEC member. However, a 20% drop in oil prices since January has created complications in finalizing the deal.

“Falling oil prices have made negotiations between Aramco and Nigeria’s government more difficult,” sources familiar with the matter told Reuters.

According to the report, Nigeria may now need to commit at least 100,000 barrels per day (bpd) of crude to support the loan terms. This is in addition to the 300,000 bpd already being used to service existing oil-backed loans.

Nigeria continues to face challenges in boosting crude output. In the first quarter of 2025, the country produced an average of 1.4 million bpd—well below its OPEC production quota of 1.8 million bpd.

“Nigeria hasn’t been able to pump to its OPEC quota for years,” said Ekperikpe Ekpo, Minister of State for Gas, at a recent industry event.

Production shortfalls have been attributed to persistent issues such as oil theft and pipeline vandalism, which have disrupted operations and deterred investment. Major international oil companies have scaled back operations, and several export terminals have experienced force majeure declarations.

In response, Nigerian authorities have stepped up efforts to reduce theft and improve operational stability. Regulatory officials also reported earlier this month that ExxonMobil plans to invest up to $1.5 billion in deepwater oil and gas projects offshore Nigeria.

The outcome of the loan negotiations could have implications for Nigeria’s broader fiscal strategy, particularly as it continues to rely heavily on oil revenues to manage debt and fund public spending.