With almost 3,000 confirmed cases of the coronavirus (the majority of which have been in China), the disease has now claimed 80 lives and major Chinese cities have gone into lock down in the hope of containing the illness, putting bans on transport and major tourist/entertainment spots such as theme parks as well as grounding planes in an attempt to prevent travel. Ten cities are now quarantined affecting over 40 million people.
As the world’s second largest economy, the implications for such restrictions are far reaching. Oil demand fell and the price of oil slumped (on Thursday to $61.25/bbl), at a time when the Lunar New Year holiday would generally prompt a huge surge in travel and energy use. Concerns over the virus’s impact on global growth shook the markets as shares in Europe and Japan sank (many Asian markets were closed for the holidays) and the Chinese currency fell.
The timing of the outbreak comes just as the US-China trade deal (phase one) was agreed in early January. President Trump lauded the deal as ‘the biggest deal ever made’, part of which involves China buying $52 billion worth of energy from the US.
So far, the outbreak is concentrated in China, however cases have now been confirmed in Thailand and Hong Kong, with eight confirmed cases each. The United States, Taiwan, Australia and Macau all have five confirmed cases. Singapore, Japan, South Korea and Malaysia have each reported four and the first three cases in Europe have been confirmed in France. As the wider world looks on with deep concern, the UK is yet to report any confirmed cases, although 14 people have been tested so far.
As the world’s largest producer and user of energy, the situation in China has the potential to significantly impact the global energy market and energy suppliers will be keeping a close eye on the situation as it unfolds.
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