Crude oil price tumbled by three per cent yesterday, as the rapid spread of a coronavirus in several countries outside China left investors fretting about a hit to demand.
This is coming as a new report by the Nigerian Natural Resource Charter (NNRC) has disclosed that 213 oil blocks are currently unallocated and therefore unproductive in Nigeria.
China, the world’s largest energy consumer was the first to be hit by the virus, which has spread globally and affected the demand for crude oil.
Global shares also extended losses as concerns about the impact of the new virus grew, with the number of infections jumping in Iran, Italy and South Korea.
The global benchmark, Brent crude was down $1.78, or three per cent, to $56.72 a barrel while the United States crude futures fell by $1.53, or 2.9 per cent, to $51.85.
Before the current slump in oil prices, the September 2019 attacks on Saudi Arabia’s Aramco facilities had briefly pushed Brent above $72 per barrel.
Reuters quoted analysts as saying that the demand destruction for crude oil is likely to intensify as travel restrictions will likely increase as the coronavirus outbreak becomes a global threat and not just contained to China.
Analysts reportedly argued that oil prices will remain vulnerable as energy traders were not pricing for fear that the coronavirus may become a pandemic.
They noted that while some parts of China are seeing improving statistics with the coronavirus, financial markets will remain on edge until we start seeing the situation improve in Iran, Italy, South Korea and Japan.
South Korea’s fourth-largest city, Daegu, grew increasingly isolated as the number of infections there rose rapidly, with some airlines suspending flights to the city until March 9 and March 28 respectively.
The country reported its seventh death after raising its infectious disease alert to its highest level.
In Paris, French Health Minister, Olivier Veran said he would talk with European counterparts soon on how best to tackle a possible epidemic, after Italy reported a third death from the flu-like virus and 150 infections, versus just three before Friday.
Iran said it had confirmed 43 cases and eight deaths, with most of the infections in the Shi’ite Muslim holy city of Qom. Afghanistan, Iraq, Kuwait, Saudi Arabia and Turkey imposed travel and immigration curbs on the Islamic Republic.
