The Fall Of Crude Oil Prices Essay

1780 Words 8 Pages
The fall of crude oil prices in 2014 has left oil exporting countries in a scramble to develop effective economic policy to minimize the effect of the crisis. The decision of the Nigerian government to peg the naira after the fall of oil prices in 2014 was heavily influenced by past Nigerian attitudes toward the IMF, and while the peg did help to keep inflation at a lower level than other oil exporting countries, the strict control of the naira failed to address the deeper structural issue of lack of diversification in the Nigerian economy.
In 2014 oil prices around the world fell due to increased U.S. production of fossil fuels and a growing use of alternative forms of energy. Many oil exporting countries who were economically dependent on high oil prices faced a period of economic crisis. Nigeria’s oil and gas sector accounts for about 35 percent of the country’s GDP and over 90 percent of total revenue from exports. The fall in prices of crude oil caused the country’s economy to contract for the first time since 2004, and placed pressure on the Nigerian currency, the naira. Other oil exporters such as Russia, Angola, and Colombia allowed their currency to devalue, while the Nigerian Central Bank decided to hold the value of naira constant at 197-199 naira per U.S. dollar in March of 2015.
While President Buhari and the Governor of the Central Bank Godwin Emefiele argued that allowing the naira to devalue would lead to inflation, consumer prices rose in spite of the…

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