The incident occurred in a village of the southern Rivers state where people had rushed to collect petrol that had spilled from a tanker that had overturned.
Eyewitnesses said the fuel-laden tanker skidded off the road, spilling its contents, while trying to avoid a head-on collision with a Toyota Corolla car.
A spark led to a fire that engulfed the area, killing scores of villagers and injuring many others.
A government official said he had counted 200 dead bodies in the fire accident that happened near Mbiama in Ahoada West Local Government Area.
National Emergency Management Agency (NEMA) spokesman, Yushua Shuaib, had told a news agency earlier that the death toll was 95 with 18 injuries in the accident.
But Rivers State Commissioner for Health, Sampson Parker, said he counted more 200 corpses at Ahoada General Hospital.
"I will describe this as the single worst incident that has happened to Rivers State since the Civil War," he said referring to 1966 Nigeria-Biafra civil war in which more than a million persons died.
A man, who identified himself as Isaac Nwanedi, said the tanker driver had warned the people rushing for the spilled fuel against coming near to the vehicle.
"The villagers ignored the driver's warning to leave the scene of the accident. But the commercial motorbike riders started calling their colleagues with their mobile phones and before you know it they were everywhere at the scene collecting fuel," he said.
Agnes Udeh, a resident of the village, was able to identify the burnt remains of a motorcycle which belonged to her husband.
"I have not seen my husband but I am sure that is his motorcycle," she an inconsolable Agnes.
"He left this morning for work. This is his bike but I cannot find him anywhere. Since I came here I have looked for him," she cried.
Nigeria is Africa's largest oil producer but most citizens live in abject poverty.
Hundreds of people have died in similar incidents, involving leaking oil pipelines or those deliberately punctured by oil thieves.
FRSC commander for Rivers State Kayode Olagunju said that three other vehicles and the tanker were involved in a road accident early Thursday at Ahoada West Local Government Area of the state.
"Rescue workers from the police, road safety, fire service, civil defence and NEMA were at the scene to evacuate victims and control traffic," he added.