Oil Price Fluctuations and All-Share Index in Nigeria

Abstract

This study investigated the effect of oil price fluctuations on the Nigerian All-Share Index (ASI) using annual data covering the period of 1993–2024, a period marked by significant macroeconomic shifts, including the oil price collapse and naira devaluation between 2014 and 2016, the COVID-19–induced oil shock and market contraction in 2020, and finally, the 2023–2024 phase marked by the complete removal of fuel subsidy. An ex-post facto research design was adopted using secondary time-series data sourced from the Central Bank of Nigeria (CBN), Nigeria Exchange and World Federation of Exchanges. The study is grounded in the Arbitrage Pricing Theory. Unit root tests were conducted to determine stationarity, while cointegration was examined using the ARDL bounds testing approach. The Autoregressive Distributed Lag (ARDL) model was then estimated, followed by post-estimation diagnostic tests. Oil price fluctuations were measured using Brent spot oil price, while real interest rate and GDP growth were included as control variables. The results revealed that oil price fluctuations exert a statistically significant influence on the ASI in both the short and long run. It recommends sustained and coordinated macroeconomic policy alignment among key institutions, particularly the Central Bank of Nigeria and the Securities and Exchange Commission, with a focus on improving information disclosure, deepening risk mitigation frameworks, and broadening institutional investor involvement to enhance overall market stability.