Goldman Sachs International Inc. reported that a possible decline in oil demand from energy-consuming China due to the spread of a new coronavirus might negatively affect oil prices, to drop by about three dollars, which countered the impact of concerns about supply disruptions from the Middle East.
The virus began spreading in Wuhan, in central China's Hubei province, and spread to the rest of the country, with 440 confirmed cases and nine deaths so far. It also spread to the United States, Thailand, South Korea, Japan and Taiwan.
The new virus, which health officials said could be transmitted from one person to another, caused concern in financial markets, as investors reminded of the severe respiratory syndrome (SARS) epidemic in 2002 and 2003, which is also a spread of a coronavirus that began in China and killed 800 people around the world.
"Translating the estimated impact of the virus on demand into 2020 volumes indicates a negative shock to global oil demand, potentially at 260,000 bpd on average," Goldman said in a note dated January 21. He added that the estimate includes a decrease of 170 thousand barrels per day for the demand for jet fuel.