Adedapo Adesanya
By Adedapo Adesanya
Oil prices fell more than three percent on Monday as the COVID-19, which has been affecting the oil market due to demand worries, spread to other countries, stirring fears in investors.
So far, the virus has claimed close to 2,600 deaths in China and in South Korea, eight persons have been confirmed dead as a result of the disease with more than 800 confirmed cases, while in Iran and Italy, the number of death and confirmed cases continue to rise.
On Monday night, the Brent crude fell $2.10 or 3.62 percent to $55. 84 per barrel, while the US West Texas Intermediate (WTI) crude shed 3.58 percent or $1.91 to settle at $51.47 per barrel.
With spread reaching oil producing Iran and over 60 confirmed cases and 12 deaths recorded in Afghanistan, Iraq, Kuwait, Saudi Arabia and Turkey, the demand will continued to be affected as these countries have imposed ban on travel and immigration to curb the spread.
The situation has so far affected other sectors as there were selloffs in global equities and other assets perceived as risky as a result of the rise in the number of COVID-19 cases outside China.
The market will be watching for a reaction from the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, even as Saudi Arabia and Russia have so far failed to reach an agreement to cut oil production as demand suffer, putting the alliance of oil producers at risk.
The Saudis are reportedly expected to hold talks with Kuwait and the United Arab Emirates (UAE) this week to discuss a possible joint production cut of as much as 300,000 barrels a day, according to reports.
It was speculated tha Saudi may break its alliance with non-OPEC member, Russia, but Saudi Energy Minister, Prince Abdulaziz bin Salman, described the reports as “absurd and utter nonsense.”
“We have all signed up to the OPEC+ charter and will continue to act in a collective manner. We are in continuous communication and dialogue with all our OPEC and OPEC+ partners,” he declared.
On the part of the Russian Energy Minister, Mr Alexander Novak, he said that producers understood this and it would no longer be necessary to meet ahead of scheduled gathering in March.
The OPEC+ meeting will take place in Vienna, Austria between March 5 and 6, and decisions taken will be crucial if no improvements are recorded before then.
