Global oil demand has certainly dropped due to coronavirus. Things got worst when major oil-producing countries, i.e., Kingdom of Saudi Arabia (KSA) and Russia failed to reach an agreement on cutting oil production. In a move to punish Russia for declining a further steep cut on its production of oil proposed by the Organisation of Petroleum Exporting Countries (OPEC), the KSA’s decision to slash its official selling prices shows that the days of stabilising oil prices by OPEC+ are over as the battle for market share begins. No doubt sparked by a plummet in demand, it is, however, the coronavirus that is pitting oil majors against each other.

The price war between the two largest oil exporters presents some opportunities for Pakistan’s government. The 30% plunge in the oil price, which is the biggest fall since the First Gulf war, is nothing short of God sent help. Pakistan can cash on this opportunity to reduce the trade deficit of Pakistan.

Perhaps, the government will try to rake in higher revenues by keeping the current rates by not adjusting the prices according to the international standards. Nevertheless, it is a golden opportunity for the state to pass on the reduction to the consumers to reduce inflation. A momentary relief to the inflation stricken people can help the government to improve its public perception. But it is also true that the state cannot bank on this for too long, as the OPEC members might reach an agreement at any moment.

Besides, the fact that the virus caused the recent collapse of the Asian markets, the Pakistani government needs to pay heed to the advice of Asia Development Bank (ADB) that recently warned of the virus’s significant impact on the developing Asian economies through numerous channels. Therefore, the government needs to be on its toes to deal with the economic challenges thrown up by the virus.