The Effects of the Drop in Global Oil Prices and the Tax Laws (Amendment) Act 2020 in the Wake of the COVID-19 Pandemic
Oil is a critical resource in fuelling economic activities globally and a key input in commodity production.1 It is not unusual for the oil industry to experience volatility in oil prices.2 Currently,
the global oil market is experiencing a plunge in oil prices as a result of the oil price war between Saudi Arabia and Russia.3 This is expected to keep prices at low levels for producers for the coming months. On 6 March 2020, the oil price war sprang during a meeting with the Organisation of the Petroleum Exporting Countries (OPEC) in Vienna. Russia refused to cut down the amount of oil per barrel it was pumping into the market. This yielded a retaliation from Saudi Arabia which, in turn, hit back with price markdowns to buyers with a guarantee to raise oil production by 25%, a level they have never supplied before. In response, Russia raised its output too and pumped in more oil per barrel.