A Panel Analysis of Brent Oil Price Dynamics on Macroeconomic Effects: The Case of Some Selected Oil-Producing Countries

The study investigates the macroeconomic effects of Brent oil price dynamics on the economies of ten major oil-producing countries, representing over 65% of global crude production across four economic regions, namely, Sub-Saharan Africa, MENA, OECD, and BRICS. The study focuses on the transmission of Brent oil price shocks through macroeconomic variables - real GDP, fiscal deficit, oil rent, external debt, and trade balance from 1981 to 2021. Using a Panel Vector Autoregressive (PVAR) model, the study effectively captures the dynamic relationships between these regions while tackling issues like endogeneity and unobserved heterogeneity. The findings reveal region-specific channels through which oil price shocks are transmitted: fiscal deficits in Sub-Saharan Africa, trade balances in MENA, real GDP in OECD countries, and external debt in BRICS. Impulse response functions and variance decomposition reveal varying sensitivities to oil price changes across these economies. Focusing on Nigeria, the study suggests robust fiscal rules and a sovereign wealth fund management strategy to boost fiscal stability and long-term sustainability. This research contributes to the policy discussions on managing oil wealth and addressing economic vulnerabilities in resource-dependent countries, emphasizing the importance of contextualized fiscal frameworks to mitigate the negative impacts of oil price fluctuations.