OIL prices dived more than nine per cent to their lowest level in three years on Friday after talks between OPEC and Russia over whether to cut oil production in response to the Coronavirus collapsed without a deal. Brent crude, the international oil benchmark, dropped as more than nine per cent as the talks unravelled to hit a three-year low of $45.28 a barrel, while US benchmark West Texas Intermediate hit a low of $41.77 a barrel. Rise and fall in oil prices is considered to be a complex story with implications for both importing and exporting countries. The recent sharp fall in prices means great relief for consumers as they will have lower fuel bills but it would drastically reduce the revenues of oil exporting countries. Experts say lower oil prices could also signify a weak global economy, which could more than outweigh the benefits of lower oil prices. For countries like Pakistan, which have huge import bill for oil, the nosedive in prices would help them save precious foreign exchange. It is, however, regrettable that the actual relief is not passed on to the end consumer as was done in the last review of oil prices by the Government, which decided to provide only fifty per cent relief to people and also increased taxes on oil to increase its revenues. There is no doubt that the Government is faced with financial difficulties and is using the oil for revenue increases but it must not forget that reduction in prices would have helped checked the rising inflation, which has become number one concern of the people. Cut in oil prices would mean lower cost of transportation, reduction in passenger fares and also reduction in cost of production and cost of doing business. These clear advantages should motivate the decision-makers to pass on the due relief to people.
