Low oil prices during COVID-19 and the case for removing fuel subsidies

  • Global oil prices have decreased due to a fall in demand resulting from COVID-19 containment measures. This presents a timely opportunity for removing fuel subsidies, in turn lowering the knock-on impact on citizens.
  • The revenue gained from removing fuel subsidies could provide additional resources for governments to respond with immediate interventions to address the COVID-19 crisis, as well as an opportunity to shift resources into more productive spending for long-run recovery and resilience.
  • This brief explains the rationale for removing fuel subsidies during the temporary reduction in global oil prices and presents five policy recommendations for governments to design reforms effectively.

This brief is published as part of the IGC’s ongoing response to the economic challenges of COVID-19.