BAKU, Azerbaijan, Jan. 30
By Leman Zeynalova - Trend:
Wuhan virus (coronavirus) will reduce China's oil consumption in the short-term, Francis Perrin, Senior Fellow at the Policy Center for the New South (PCNS, Rabat) and at the French Institute for International and Strategic Affairs (IRIS, Paris), told Trend.
He noted that the coronavirus had a significant bearish impact on oil prices for the following reasons:
China is the second-largest oil consumer behind the United States.
China is the world's largest crude oil importer.
Strong measures taken by the Chinese authorities will considerably reduce road and air travels for dozens of millions of persons within China and between China and foreign countries at the time of the Lunar New Year holidays.
Several foreign airlines will cancel flights to and from China.
Several foreign companies ask their employees not to travel to China for the time being.
Oil is the ultra-dominant energy source for the transport sector.
This crisis will slow China's economic growth.
All these decisions will reduce China's oil consumption in the short-term.
The refined products which will be mostly hit are kerosene, gasoline and diesel fuel.
“Moreover there are a lot of uncertainties about the future impact of this coronavirus as the number of infection cases is rapidly growing as well as the death toll in China and the number of countries involved. These uncertainties add to the bearish pressures on oil prices,” said Perrin.
The expert said it is very unlikely that there will be a long-term impact on oil prices.
“The short-term impact is really significant but, despite this crisis, China's oil demand and world oil demand will rise in 2020. Before this coronavirus SARS and MERS, first reported in China and in the Middle East in 2002 and 2012 respectively, did not have a long-term impact on oil demand and prices. There is no reason so far to think that the situation will be very different with this new coronavirus,” added Perrin.
The outbreak in the Chinese city of Wuhan - which is an international transport hub - began at a fish market in late December of 2019 and since then more than 130 people have died, including a doctor who was treating the victims. Some sources claim the coronavirus outbreak started as early as November 2019.
The symptoms include cough, headache, fatigue, fever, aching and difficulty breathing. It is primarily spread through airborne contact or contact with contaminated objects.
Chinese health authorities say that the majority of the people who have died were either elderly or had underlying health problems.
The virus is spreading at a rapid pace but researchers are far from finding a vaccine.
Aside from Mainland China, the cases of coronavirus spreading have also been confirmed in Thailand, Hong Kong, Taiwan, Japan, Macau, Malaysia, Singapore, Australia, the US, France, Germany, South Korea, Canada, Vietnam, Cambodia, Nepal and Sri Lanka.
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