A senior International Energy Agency (IEA) official said Tuesday that the global oil demand outlook—earlier forecast to be already the lowest in a decade—could fall even further as the deadly novel coronavirus continues to spread.
“We certainly see the lowest oil demand growth in the last 10 years and we may need to revise it ...downwards,” IEA Executive Director Fatih Birol told Reuters at an energy conference in London.
“Global oil demand has been hit hard by the novel coronavirus (Covid-19) and the widespread shutdown of China’s economy,” the agency noted, calling the outbreak “a major global public health emergency that has brought tragedy to many lives.”
The IEA said the economic impact of the virus was “still unfolding globally,” with eyes acutely on how it would affect demand from China, which last accounted for over three-quarters of global oil demand growth.
Finance ministers from the G20 Summit acknowledged the threat to the global economy as they gathered in Saudi Arabia this week, while the International Monetary Fund cut its global GDP growth forecast by 0.1 percent, adding that it the virus spreads further or the outbreak lasts longer, that outlook may face a downward revision.
Crude prices fell about 3 percent on Tuesday, dropping for a third day, as concerns about the spread of the coronavirus and its impact on oil demand outweighed OPEC output cuts and Libyan supply losses.
Brent crude fell $1.35, or 2.4 percent, to settle at $54.95 a barrel. U.S. West Texas Intermediate crude dropped $1.53, or 3 percent, to settle at $49.90 a barrel.
Allen Sukholitsky, chief macro strategist at Xallarap Advisory, told The Epoch Times that as oil producers reduce output, prices are likely climb again.
Wall Street ‘Fear Gauge’ Spikes
In a sign of ongoing market turbulence, the VIX volatility index, also known as Wall Street’s “fear gauge,” spiked to 30.2 on Tuesday, with the ceiling of 30 widely seen as the threshold demarcating major market uncertainty and investor anxiety.On Monday, when Wall Street was in the grip of a massive rout, the VIX shot up to 26.2.
‘Not Clear How Virus Is Spreading’
A troubling development is that coronavirus infections have been noted in people who hadn’t traveled to China or come in contact with confirmed cases, which shows that “it’s not clear how the virus is spreading,” a spokeswoman for the World Health Organization (WHO) said. “We’re seeing some cases that don’t have a clear epidemiological link.”Americans should brace themselves for virus-related disruption, an official for the Centers for Disease Control and Prevention (CDC) said Tuesday, adding “this might be bad.”
“We are asking the American public to prepare for the expectation that this might be bad.”