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The Impact of Crude Oil Price Volatility on Economic Growth in Nigeria

Author

Listed:
  • Eloho Victoria Ozokede

    (Department of Economics, Faculty of the Social Sciences, Delta State University, Abraka, Delta State, Nigeria.)

  • Titus Olufemi Awogbemi

    (Department of Economics, Faculty of the Social Sciences, Delta State University, Abraka, Delta State, Nigeria.)

Abstract

This study investigates the impact of oil price volatility on economic growth in Nigeria over the period 1990 to 2023. Using an Autoregressive Distributed Lag (ARDL) model, the research evaluates both the short-run and long-run effects of changes in crude oil price (COP), fuel pump price (FPP), inflation (INFL), interest rate (INTR), and exchange rate (EXR) on Nigeria’s real GDP growth rate (GDPGR). The study further employs unit root tests to determine the stationarity status of the variables and conducts a bounds testing approach to cointegration to assess the presence of a long-run relationship among the variables. Specifically, fuel pump price had a negative short-run effect, suggesting that domestic fuel pricing, largely shaped by subsidy regimes and import dependence, plays a more disruptive role than crude oil earnings. Furthermore, inflation showed a weak negative short-run impact, indicating that macroeconomic instability continues to hinder growth. The findings suggest that the Nigerian economy remains vulnerable to oil price volatility but has yet to establish strong macroeconomic transmission mechanisms that translate oil windfalls into sustainable economic growth. Consequently, the study recommends policy measures aimed at diversifying the economy, improving petroleum refining capacity, stabilizing inflation through credible monetary policy, and insulating the exchange rate from excessive oil dependence. This research contributes to the ongoing discourse on oil-driven growth in developing economies and offers insight into Nigeria’s macroeconomic structure and oil revenue management.

Suggested Citation

  • Eloho Victoria Ozokede & Titus Olufemi Awogbemi, 2025. "The Impact of Crude Oil Price Volatility on Economic Growth in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(9), pages 7385-7396, September.
    • Handle: RePEc:bcp:journl:v:9:y:2025:issue-9:p:7385-7396
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    References listed on IDEAS

    as
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