The Impact of Crude Oil Price Volatility on Economic Growth in Nigeria
The Impact of Crude Oil Price Volatility on Economic Growth in Nigeria
Eloho Victoria Ozokede, Titus Olufemi Awogbemi
Department of Economics, Faculty of the Social Sciences, Delta State University, Abraka, Delta State, Nigeria.
Publication Information
Journal Title: International Journal of Research and Innovation in Social Science (IJRISS)
Author(s): Ozokede, Eloho Victoria ; Awogbemi, Titus Olufemi
Published On: 12/04/2025
Volume: 9
Issue: 9
First Page: 7385
Last Page: 7396
ISSN: 2454-6186
Cite this Article Ozokede, Eloho Victoria ; Awogbemi, Titus Olufemi ; The Impact of Crude Oil Price Volatility on Economic Growth in Nigeria, Volume 9 Issue 9, International Journal of Research and Innovation in Social Science (IJRISS),7385-7396, Published on 12/04/2025, Available at https://rsisinternational.org/journals/ijriss/articles/the-impact-of-crude-oil-price-volatility-on-economic-growth-in-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.
Keywords: Oil price volatility, Economic growth, ARDL, Nigeria