Ngonyama, NMandere, Marlven Kudzai2026-09-082026-09-082025-08http://hdl.handle.net/20.500.11837/5096This study investigates the impact of crude oil price shocks on macroeconomic variables in South Africa, covering the period from 2001Q1 to 2023Q4, with a specific focus on interest rates, exchange rates, inflation, money supply, and domestic credit to the private sector. The South African economy is vulnerable to fluctuations in global crude oil prices, which can have significant impacts on macroeconomic variables. Building on existing literature (Yıldız et al., 2021; Sekati et al., 2020; Gonese et al., 2018), this study employs impulse response functions (IRFs), variance decompositions (VDCs), and block exogeneity tests under VECM assumptions to analyze the dynamic relationships between crude oil prices and macroeconomic variables. The results show that crude oil price shocks have a significant impact on South Africa's macroeconomic variables, including a depreciation of the real effective exchange rate, inflationary pressures, monetary policy tightening, and a reduction in domestic credit to the private sector. To mitigate the adverse effects of crude oil price shocks on the exchange rate, inflation, monetary policy, and domestic credit, the study recommends that South Africa prioritizes the adoption of sustainable energy sources, particularly in the transport sector which accounts for a significant portion of crude oil consumption. By reducing dependence on crude oil, South Africa can enhance its economic resilience. Furthermore, the South African Reserve Bank should closely monitor oil prices, exchange rates, and credit growth when making interest rate decisions to ensure economic stability.enPetroleum products -- PricesPetroleum industry and tradeThesis