IHS Markit: Coronavirus unlikely to have long-term impact on oil prices

Coronavirus is highly unlikely to have a long-term impact oil oil prices, Spencer Welch, director of the oil markets and downstream team in the London-based IHS Markit.

“China will recover, people will start travelling again, and trade will go back to normal, but how long this will take, and therefore the impact the economy and oil demand at this stage is hard to predict,” he said.

Welch noted that the oil price has dropped by $6 per barrel in the last weeks because of coronavirus and this is despite more instability in Middle East, and the crude export outage from Libya.

“The oil market is concerned about the coronavirus negative impact on Chinese oil demand and also the global economy. The Chinese lock-down happened at the Chinese new year, the peak for oil demand because of travel, and so the market is concerned about how this will temporarily reduce Chinese oil demand, the actual impact will not be known for a few months, when data is available,” he explained.

There is also a knock-on impact on global trade (and therefore oil demand), again the magnitude at this stage is unknown, added the expert.

The outbreak in the Chinese city of Wuhan – which is an international transport hub – began at a fish market in late December 2019. Since then over 560 people have died and over 28,000 people have been confirmed as infected. Some sources claim the coronavirus outbreak started as early as November 2019.

The symptoms include cough, headache, fatigue, fever, aching and difficulty breathing. It is primarily spread through airborne contact or contact with contaminated objects.

Chinese health authorities say that the majority of the people who have died were either elderly or had underlying health problems.

Aside from Mainland China, the cases of coronavirus spreading have also been confirmed in Japan, Singapore, Thailand, South Korea, Hong Kong, Australia, Germany, the US, Malaysia, Taiwan, Vietnam, Macau, France, Canada, the UAE, India, Italy, Russia, Philippines, the UK, Nepal, Cambodia, Belgium,Spain, Finland, Sweden, Sri Lanka.