With the World Health Organisation (WHO) declaring a global health emergency and millions of Chinese citizens in quarantine and lockdown, the coronavirus is taking an economic toll as well as a medical one.
A number of leading tech firms, such as Amazon, Microsoft and Google, have temporarily closed all of their offices in China, while major Chinese manufacturers like Foxconn have suspended operations in certain cities.
This general decline in economic activity is expected by some to weigh on China’s purchasing of commodities such as oil.
According to the latest data, China’s crude oil imports from the world’s largest supplier Saudi Arabia rose by almost 47 per cent in 2019 year-on-year.
This surge was thanks in large part to a new marketing strategy by the state-backed oil and gas firm Saudi Aramco, which signed at least two new supply agreements with private refiners in China.
Speaking last week before the scale of the virus grew to its current extent, Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, stated that the kingdom was “closely monitoring” the effect of the virus on the market.
Nonetheless he argued that that week’s drops were “primarily driven by psychological factors and extremely negative expectations adopted by some market participants, despite its very limited impact on global oil demand.”
Oil prices have fallen throughout this week, although by mid-morning trading on Friday Brent Crude Oil Futures were up 0.46 per cent at $58.56 per barrel while WTI Oil Futures gained 0.35 per cent at $52.32 per barrel.
With tensions between the US and China somewhat reduced by this month’s initial phase-one trade deal, Chinese imports of American oil are expected to surge in 2020. However, should the coronavirus continue to hobble the nation and its economy then oil imports from all suppliers will be affected.