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Oil prices are also under threat after Saudi Arabia and the United Arab Emirates announced increased production, only to face Russia. This would mean an increase in cheap oil supplies in the world.
Oil prices fell by more than 5% on Thursday after the United States announced without warning restrictions on most flights from Europe to contain the spread of the new coronavirus in the country.
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Oil Falls 30% As Saudi Arabia Slashes Prices, Sparks Price War
The sudden decision "caused a loss of confidence in governments and increased uncertainty about the real impact of the virus on the economy," the head of oil markets at energy consulting firm Rystad Bjoernar Tonhaugen said at a press conference Wednesday.
"This is reflected in the sharp falls in oil prices that took place on Thursday morning," he said.
Within hours of President Donald Trump's announcement, and the World Health Organization's description of the outbreak as a pandemic, Brent crude LCOc1 was down $1.98, or 5.5%, at $33.81 by around 12h15. Meanwhile, U.S. crude LCOc1 was down $1.90, or 5.8%, at $30.08.
A major ripple effect from the #coronavirus outbreak is a historic drop in #oilprice. March 9th saw the 2nd largest drop, 31.5%, since #OPEC was created. A price war is heating up between #SaudiArabia and #Russia due to the unclear global economic future.
— Statista (@StatistaCharts) March 11, 2020
https://t.co/WqLN9JD1xZ pic.twitter.com/cxX1p6VTaB
These figures show that Brent and U.S. crude oil are down 50% from their January highs, reported Bjoernar.
Oil prices are also under threat after Saudi Arabia and the United Arab Emirates announced increased production, only to face Russia. This would mean an increase in cheap oil supplies in the world.
Similarly, the coronavirus outbreak has drastically reduced the forecast for oil demand in the coming months.
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