ABSTRACT
The study employed several econometric methods to analyze the relationship between crude oil prices, exchange rates, inflation, and economic growth in Nigeria. Descriptive statistics were calculated to understand the characteristics of the variables, such as mean, median, maximum, minimum, standard deviation, skewness, and kurtosis. Some variables exhibited potential non-normality based on these measures. Correlation analysis revealed a strong positive relationship between real GDP and crude oil prices, a weak positive relationship between real GDP and the exchange rate, and a weak negative relationship between real GDP and inflation. This provided initial insights into the associations among the variables. Unit root tests, specifically the Augmented Dickey-Fuller test, were conducted to check the stationarity of the variables. The results indicated that the variables were not stationary at levels but became stationary after taking the first difference. The study offers several recommendations to guide policymakers in navigating the complex relationship between oil price fluctuations and macroeconomic variables in Nigeria. Firstly, diversification of the economy is paramount. Given the vulnerability to oil price shocks, policymakers should actively promote and support sectors beyond oil, such as agriculture, manufacturing, and services. This strategic shift would reduce Nigeria's excessive reliance on oil as the primary driver of economic growth, enhancing resilience. The study's conclusions shed light on the intricate relationship between oil price fluctuations and macroeconomic variables in Nigeria. Firstly, it was evident that Crude Oil Price (COP) does influence Real Gross Domestic Product Growth (RGDP), although the effect appeared to be relatively weak. This underscores the need for Nigeria to diversify its economy away from overreliance on oil, given the vulnerability to oil price shocks.
