Title: The Impact of Oil Prices on Nigeria's Economy: Examining Fluctuations in Global Oil Prices and Nigeria's Economic Stability and Growth
Authors: Ajayi Uwomano Justina & Uwagwu Isioma
Volume: 9
Issue: 8
Pages: 100-111
Publication Date: 2025/08/28
Abstract:
This study examined the relationship between global oil price volatility and Nigeria's economic stability and growth, focusing on three key objectives: to assess the socioeconomic impacts of oil price fluctuations on Nigerian households and communities, to evaluate the effects of such fluctuations on public debt and fiscal sustainability, and to determine the role of government policies in mitigating these impacts. Using annual data from 2000 to 2023 on global oil prices and Nigerian macroeconomic indicators including GDP growth, government revenue, unemployment, inflation, and public debt, the study employed correlation analysis and multiple regression techniques to quantify the magnitude and direction of these relationships. The findings revealed that oil price volatility exerts a significant positive influence on GDP growth and government revenue, while maintaining a negative relationship with unemployment and public debt. However, the relationship between oil prices and inflation was found to be weak and statistically insignificant, suggesting that inflationary trends are driven largely by structural and monetary factors beyond oil price movements. The analysis confirmed that economic booms in Nigeria are strongly linked to periods of high oil prices, whereas oil price downturns coincide with recessions, fiscal strain, and increased borrowing. The study concluded that Nigeria's economy remains highly vulnerable to external oil market shocks due to its dependence on crude oil exports. It recommended the establishment of an automatic, comprehensive social protection framework to shield households during downturns, the legal enforcement of a fiscal savings rule through the Sovereign Wealth Fund to stabilize public debt, and the institutionalization of countercyclical fiscal policies to sustain economic stability. By implementing these measures, Nigeria can enhance its resilience to oil price volatility and promote sustainable economic growth.