Crude Oil Price Volatility and its Impact on Nigerian Stock Market Performance (1985-2014)


  • Olamide T. Ojikutu
  • Rita U. Onolemhemhen University of Lagos
  • Sunday O. Isehunwa


The impact of falling oil prices on stock market and exchange rates differs from country to country, either oil-exporting or oil-importing country. Empirically, previous studies have measured the impact of crude oil price volatility on stock market performance. However, limited studies exist for Nigeria and other oil exporting countries. Thus, this study seeks to fill the gap in existing literature by establishing the nexus between oil price, exchange rate and stock market performance in Nigeria. Using the Ordinary Least Square estimation technique, the basic variables adopted in this study are All Share Index (ASI) which serves as a proxy for market performance, Crude Oil Price (COP) and Exchange Rate (EXR). Annual time series data covering the period of 1985-2014 was used to estimate the model using regression analysis. Based on the Trace statistics result, there exists one co-integrating relationship among All Share Index (ASI), Crude Oil Prices (COP), and Exchange Rate (EXR). The R2 value was 0.505; showing that 50.5% of the variation in stock market performance can be explained by Crude Oil prices and Exchange Rate. The F-statistic value of 2.17 (P<0.05) shows that All Share Index, Crude Oil Prices and Exchange Rate are jointly significant and the Durbin Watson value of 2.22 implies that the model does not suffer from autocorrelation. Also, based on the P-values, Crude Oil Prices was found to be insignificant, which means that fluctuations in oil prices do not directly affect the performance of the stock market. In conclusion, crude oil prices and exchange rate does  impact All share index. It is therefore recommended that the Nigerian government should take steps to ensure that Oil companies in Nigeria are listed on the stock market, to have more direct impact on the economy. The novelty of this study is the ability to tell the relationship between crude oil prices and the Nigerian stock exchange. This study will guide government in formulating policies relating to the petroleum industry considering the impact their decisions will have on the economy if the oil companies are listed in the stock market.

Keywords: Oil price, exchange rates, volatility, stock market

JEL Classifications: E3, F31, Q4


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Author Biography

Rita U. Onolemhemhen, University of Lagos





How to Cite

Ojikutu, O. T., Onolemhemhen, R. U., & Isehunwa, S. O. (2017). Crude Oil Price Volatility and its Impact on Nigerian Stock Market Performance (1985-2014). International Journal of Energy Economics and Policy, 7(5), 302–311. Retrieved from