BBC reports that except disruptions in the shipping industry, the coronavirus has negatively affected crude oil performance, as the cost of crude hit its lowest level in a year after falling 20% since its peak in January.
It is stated that the spread of the virus extended the Lunar New Year holiday in China and led to travel restrictions. Consequently, factories, offices and shops remain out of operation meaning that the demand for crude oil is decreasing.
China, which is said to be the world’s biggest importer of crude oil, on an everyday basis consume approximately 14 million barrels a day. Yet, now, because of the virus, the country needs a lot less oil to power machinery, fuel vehicles, and keep the lights on.
The flight restrictions also impact crude oil as the demand for jet fuel is declining.
Bloomberg reported that China’s daily crude consumption lowered by 20%, the equivalent of the UK and Italy’s oil needs combined. So, Asia’s largest oil refiner Sinopec, Government-owned, has cut the amount of crude it is processing by about 600,000 barrels per day, or 12%, its biggest cut in more than a decade.
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In light of the above, Zhang Ming, an economist at government-backed think-tank the Chinese Academy of Social Sciences, noted that the outbreak could push the country’s annual economic growth below 5% for the first three months of the year.
However, BBC comments that China’s slowed economic growth can impact across the globe.
Overall, oil producers are discussing of cutting down output between 500,000 and one million barrels a day at a meeting that is expected to take place this week amongst Opec+.
See also
- Coronavirus update: Live map confirms 24,562 cases up to now
- Smart tools to monitor Coronavirus spread
- Coronavirus: 6 tips to stay protected and not infected
