Crude oil prices fell to the lowest in more than a year yesterday as the coronavirus outbreak curtailed Chinese demand and sparked potential supply cuts by the Organisation of Petroleum Exporting Countries (OPEC) and its allies.
The global benchmark, Brent crude settled down $2.17, or 3.8 per cent at $54.45 a barrel, its lowest since January last year.
US West Texas Intermediate (WTI) crude fell $1.45 a barrel to $50.12 after touching a session low of $49.91, also the lowest since January 2019.
As the outbreak hits fuel demand in China, the world’s biggest crude oil importer, refiner Sinopec Corp told its facilities to cut throughput this month by about 600,000 barrels per day (bpd), or 12 per cent, the steepest cut in more than a decade.
OPEC and its allies, a group known as OPEC+, are considering a further 500,000 bpd cut to their oil output, three OPEC sources and an industry source told Reuters.
The Wall Street Journal reported that another option being considered would involve a temporary cut of 1 million bpd by Saudi Arabia to jolt oil markets.
Iranian Oil Minister Bijan Zanganeh said the oil market is under pressure with prices dropping below $60 a barrel, and “efforts must be made to balance it.”