International Petroleum Price Volatility

An Appraisal of Impact on Petro-Dependent Developing Economies like Nigeria in an Era of Covid-19 Pandemic

Abstract

Petroleum or crude oil remains one of the major mineral resources that have contributed to the development of world economies. This contribution notwithstanding, it poses also great socio-economic challenge to petro-dependent developing economies like Nigeria as a result of unpredictable international oil price volatility. Worsened by the phenomenon of price volatility is the sudden outbreak of the corona virus pandemic, which has locked down and crippled many national economies, especially those of petro dependent developing economies. What are the causes and how does oil price volatility affect the stability of countries whose fiscal health is tied to oil prices?  Adopting the qualitative approach of content analysis, it has been argued that these negative outcomes are not inevitable since they can be avoided or at least minimized when good governance, public accountability and transparent resource management, willingness of countries to transform oil revenues into positive development outcome are prevalent. To cushion the effects of oil price volatility certain measures need be put in place; namely, effort should be made to delink public expenditure from happenings in the international oil market by diversifying the revenue base from oil. Again, it has become more urgent now than ever before for the government to seriously consider the use of tax handle in the effort to boost the nation’s revenue base. Also, there should be more commitment by the government towards boosting of the Agriculture and solid minerals sectors as alternative sustainable revenue sources rather than the near total dependence on petroleum as its presented obtainable.