An In-depth Analysis of the Impact of Annual Crude Oil Prices on Aviation Sector Growth in Nigeria

This study investigated the impact of annual crude oil prices on Nigeria’s aviation sector growth from 1995 to 2024. Using secondary time-series data from the CBN, OPEC, and NBS, the Vector Error Correction Model (VECM) assessed short- and long-run relationships among Bonny Light, Forcados, and Brent crude prices, exchange rate, inflation, and aviation output. Results show that fluctuations in Bonny Light and Brent prices significantly reduce aviation output by increasing operational costs and lowering profitability. Exchange rate and inflation also influence performance, indicating that macroeconomic instability intensifies oil price effects. The error correction term confirms long-run stability, showing gradual sectoral adjustment to short-term shocks. The study concludes that oil price volatility critically shapes aviation performance and recommends fuel hedging, better exchange rate management, and policy reforms to stabilise fuel supply chains and promote local jet fuel production for improved sectoral resilience.