Global Economy: Oil Prices Drop To Lowest Level In Over A Year Amid Coronavirus Outbreak

Oil prices on Monday dropped to their lowest levels in over a year due to concerns that the Coronavirus is causing a decrease in demand from China.

At the session low, U.S. West Texas Intermediate fell more than 3% to $49.92, its lowest price since January 2019. Brent crude dropped 3.9% to $54.41 a barrel, its lowest level since Jan. 3, 2019.

The Wall Street Journal reported Monday that Saudi Arabia is considering cutting back oil production until the Coronavirus crisis ends. Saudi Arabia, along with other members of the Organization of the Petroleum Exporting Countries (OPEC), could collectively cut back production by 500,000 barrels a day.

Saudi Arabia could also choose to cut back one million barrels a day in oil production by itself.

Bjarne Schieldrop, an analyst with Sweden’s SEB Markets, told the Journal that a cut of “500,000 barrels is far from enough but it’s typically good for OPEC to be involved with tactical cuts.”

“The first numbers out of China show losses to demand of 3 million barrels a day and the extent of the virus is still unfolding. We’re nowhere near stabilization,” she added.

The Coronavirus has killed at least 362 people and infected over 17,300 individuals globally. The outbreak has paralyzed the Chinese economy, with 46 million Chinese on lockdown to prevent the spread of the virus.

The virus has caused major airlines to suspend their flights to China and has forced major companies such as Google and Apple to shut down their offices in the country. The outbreak has been declared a global health emergency by the World Health Organization.