A technical meeting is under way at the Organization of the Petroleum Exporting Countries (Opec) in Vienna to discuss the impact of the coronavirus on the oil market.
Following the outbreak of the virus – which has already killed over 500 people and infected more than 28 000 - the country’s oil demand is estimated to have fallen by 20 per cent, according to Opec. China is the world’s largest importer of oil, consuming up to 14 million barrels each day. On Monday (February 3) Brent crude prices dropped by 4 per cent closing at $54.45 a barrel, down 24 per cent on a January high. As a result, OPEC said it might look to cut oil production by up to 1 million barrels per day.
Separately, Bloomberg reported that Oman’s oil and gas minister ,Mohammed al-Rumhy, had said he expected traders to divert sales of the country's crude to other destinations if there was a slowdown in demand from China.
“The virus, which originated in Wuhan, has impacted automakers and tech firms across China. Apple confirmed it would close offices and stores in China, while Toyota has suspended operations at production plants until 9 February,” said al-Rumhy.
According to the minister, if plants remain shut in Hubei – a major components hub for automakers -global car production could drop by 1.7 million units in the first quarter of 2020. It has been reported that air freight is already down 50 per cent, while the Yangtze River is experiencing a backlog.