Modelling Tanker Transportation Demand in Nigeria’s Crude Oil Market

Abstract

Tanker shipping is a critical component of Nigeria’s crude oil export system and is largely driven by global economic conditions and shipping market dynamics. This study models tanker transportation demand in Nigeria’s crude oil market using annual time series data spanning 1990–2019. An auto-regressive distributed lag-unrestricted error correction model (ARDL-UECM) is employed to account for mixed orders of integration and to estimate both short-run dynamics and long-run elasticities. Tanker transportation demand is specified as a function of World GDP per capita, Brent and Bonny Light crude oil prices, global tanker fleet capacity, freight rates, piracy incidents, tanker accidents, ship turnaround time, and world population. The results confirm the existence of stable long-run equilibrium relationship among the variables. World GDP per capita emerges as the dominant determinant of tanker transportation demand, with a 1% increase in global GDP per capita leading to an estimated 2.55% increase in tanker transportation demand in the long run. In contrast, piracy incidents, tanker accidents, freight rates, and ship turnaround time exert negative but statistically weak effects, indicating that their effects operate through lagged and broader market mechanisms rather than direct short-run responses. Diagnostic tests, including the CUSUM and CUSUM of squares, confirm both parameter and variance stability of the estimated model. The study contributes to maritime economics literature by providing a unified ARDL-based tanker demand model that integrates global macroeconomic forces, shipping market dynamics, and Nigeria-specific operational risks, offering valuable insights for maritime policy, port efficiency planning, and tanker market forecasting.