The plummeting price of oil on the world market provides an opportunity for oil-producing countries to scrap subsidies on fuel prices, the Managing Director of the International Monetary Fund (IMF) has said.

Christian Lagarde in an online Q&A session on emerging market economies said: “I think you have to look at any circumstances, any situation, from a threat and an opportunity point of view.”

“I think the great opportunity that the low oil prices have to offer is the fact that subsidies that have historically been paid from state, government revenue to encourage the consumption of oil, particularly in oil-producing countries, these subsidies could much more easily be removed and replaced by targeted safety nets that will help the poor people, or will actually unleash fiscal revenue that can be used to encourage education, support health,” Ms Lagarde said.

“What would put me back to sleep is the certainty that those countries that benefit, in a way, from the lower price of oil, can actually remove the subsidies that are totally counterproductive and replace them with good and efficient spending of fiscal revenue for the poor, for those that need education, for those that need health,” she added.

Global benchmark Brent crude futures settled down 40 cents, or 1.2 per cent at $34.06 a barrel, after trading between $35.14 and $33.81. They last traded down 44 cents at $34.02.

U.S. West Texas Intermediate crude futures closed 83 cents, or 0.1 per cent lower, at $30.89 a barrel, after touching a high of $32.45. They last traded down 87 cents at $30.85.