Oil prices on Monday morning shed a further 2% off the already trimmed prices after it emerged that Coronavirus can spread without showing symptoms, casting doubts on the containment efforts by the affected countries.
The drop marks a multi-month low in the wake of a promising start earlier this year following the signing of the China-US trade deal. Reports during the weekend indicated that the virus had claimed over 56 lives and infected at least 1,975 people in China alone, escalating panic among oil trading nations.
The Chinese government has put in place a nationwide ban on wildlife trade with more than 56 million people across 20 cities being affected by last week’s travel ban.
China is the world’s most populated country with an estimated population of nearly 1.4 billion in addition to the millions of foreigners that trickle in through its borders each year, making it more difficult to contain the virus. Cases of Coronavirus were last week reported in the US, Australia, and Thailand after some of its citizenries visited the Asian nation.
The spread of the virus is heavily impacting trade, and commodities have been some of the biggest casualties.
By 0113 GMT today, Brent had dropped 1.9% or $1.12 to settle at $59.57, after an earlier fall to $58.68, registering a new low since October last year. US Crude fell 2.1% or by $1.14 to $53.04 after an earlier easing at $52.15, recording yet another new low since October 2019.
Prince Abdulaziz bin Salman Al-Saud, who is also Saudi Arabia’s Energy Minister, on Monday said that he was keenly following China’s developments regarding the Coronavirus and expressed confidence that the new killer virus would be contained soon enough.
Global markets are being “primarily driven by psychological factors and extremely negative expectations adopted by some market participants despite its very limited impact on global oil demand,” the Prince said.
As the virus continues to spread, more global financial markets are being dealt a blow, although most Chinese-based ones remain closed during this year’s Lunar New Year holidays.
While reports indicate that the current virus appears to be less severe compared to the 2003 SARS epidemic that led to the loss of more than 1,000 lives in Asia, officials caution that unlike back then, the transport systems in place today are far more interconnected, making it easier for the virus to spread.
Meanwhile, other commodities including cone and soybeans have been tumbling amid concerns over possible fall in demand from Asian markets.