Chinese energy executives are projecting that the country’s oil consumption will plunge by 25 percent this month as the deadly coronavirus outbreak paralyses travel and shuts down industrial activity in the world’s second-biggest economy. Executives at some of the country’s largest refineries expect that nationwide demand will fall by a staggering 3.2m barrels a day in February from last year – a drop equivalent to more than 3 percent of global consumption.
Oil prices have already crashed on expectations of plunging demand as the Chinese authorities quarantined cities, restricted air and road travel, and extended factory closures following the lunar new year holiday. But the projections of senior executives in China – the world’s top oil importer – are likely to undermine market confidence further. Chinese oil demand in February 2019 was just under 13m barrels a day, according to the International Energy Agency.
Opec countries and allies including Russia are scrambling to thrash out a response to a demand shock that could rival the drop in consumption witnessed at the nadir of the global financial crisis in 2008. The oil major BP warned this week that the coronavirus outbreak could cut global oil demand by 300,000 -500,000 barrels a day on average this year.
Brent crude, the international benchmark, has dropped more than 20 per cent since early January, falling below $55 a barrel earlier this week. It rebounded slightly on Wednesday amid hopes that a treatment for the virus would be found. Chinese refiners, which process crude to create fuels such as petrol and diesel, are facing a big hit to sales as Beijing struggles to control the spread of the virus.