The coronavirus outbreak in China has slashed the country’s oil demand by 20%, equal to 3 million bpd, Bloomberg reported citing insiders with knowledge of China’s energy industry. The decline was measured relative to the consumption level in the same period last year, the sources said.
If the figure is correct, the fall in China’s oil consumption will be the sharpest since the 2008-2009 global financial crisis. This can force OPEC and allies to deepen their supply cuts further. Some OPEC+ producers have discussed for an emergency meeting, with Saudi Arabia urging the other members to hold the ministerial meeting earlier than the initial schedule in March.
According to a report by Reuters citing an industry source and three OPEC sources, OPEC+ is considering deepening their supply cut again by another 500,000 bpd. They also explore a possibility to temporarily cut Saudi Arabia’s production by 1 million bpd to jolt oil markets, The Wall Street Journal reported.
The international benchmark Brent had plunged about 14% since January 20 when the market realized the magnitude of the virus outbreak which has now claimed 426 lives. Brent crude LCOc1 extended decline on Monday, falling by $2.17 (3.8%) to $54.45/barrel, its lowest since January 2019.