As the World Health Organization on Friday upgraded its global risk assessment for the coronavirus to “very high”, anxious oil markets are wondering when might be a good time to panic about the oil demand and its effect on inventories, investment dollars, and ultimately, oil prices.
Now could be as good of a time as any.
Where We Stand
So far, the coronavirus has infected more than 80,000 people worldwide, claiming nearly 3,000 lives. It has spread to 49 different countries in just a few short weeks, and continues to disrupt airline travel on a massive scale. In California, one possible case of community transmission reared its head—bringing awareness of what the virus can do to a whole new level.
And make no mistake, there is more pain coming.
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WNU Editor: If what is happening in China, Iran, and South Korea is duplicated in places like the U.S., Japan, Germany, and the U.K., the drop in oil consumption will be a disaster for those countries that depend on oil exports. Iran exports over half of its oil to China. This market is now closed. Venezuela needs to sell oil to meet its debt obligations to China and Russia. But the price to extract this oil makes it economically unfeasible to sell it at today's prices. Bottom line. If this outbreak continues for the rest of the year, the impact on countries like Iran and Venezuela will be disastrous.
