The coronavirus outbreak in China has affected global oil markets as fears for global growth caused oil prices to plummet by 10%.
China's coronavirus outbreak sparked fears among oil market investors that efforts to prevent the sickness from spreading will affect the country's economy and demand for crude, causing oil prices to fall by 10%.
Brent crude futures traded around 3% lower on Monday at $58.88 a barrel, their lowest level since October 2019 while US crude futures were down by approximately 3%.
Since January 17, when Chinese authorities confirmed the death of a second person infected with the virus, the price of Brent, which is considered the global benchmark, has fallen by about 10%.
The virus has spread rapidly since, with coronavirus-related deaths now at 80 and almost 3,000 confirmed cases in China, along with more than 50 cases in other countries, including the US.
Analysts at Rabobank said in a research note: "As the human cost continues to rise, investors have become increasingly concerned about the potential economic consequences of the disease."
"Prices of copper, iron ore and oil have slumped as investors anticipate supply chain disruptions across several industries and a broad slowdown in economic activity," they added.
The outbreak is expected to further weaken the Chinese economy, the second largest economy in the world. The country has recently seen its slowest growth in nearly three decades.
Ratings agency S&P Global forecasts China's economic growth to contract by as much as 1.2 percentage points this year if spending on services such as transport and entertainment fall by 10%.
Analysts at Commerzbank said in a research note: "The virus is fueling fears of cooling of oil demand, which would mean that the global oil market would be oversupplied to an even greater extent."
Saudi Arabia's energy minister, Prince Abdulaziz bin Salman, attempted to appease investors by saying that the virus will have a "very limited impact on global oil demand."
