Corona Virus Slashes Crude Oil Usage
The recent Corona Virus epidemic in China has the world on high alert as other countries stay vigilant to stem the spread of the illness that has already claimed hundreds of lives.
Markets around the world have been doing weird things as a result of the threat as well as the extended Chinese new year holidays which has seen millions of people staying at home and not consuming products and services as usual.
The Effect On Petrol & Oil Usage
Which so many Chinese people staying at home and avoiding travel as well as so many businesses not running at full efficiency there has been a massive drop in petrol and (Brent crude) oil in China. Add to this the reduction in airplane travel to and from Asia in general and China in particular and the impact is significant. This has seen the price of Brent Crude’s cost drop by a massive 20% (just after it had been peaking in January) in just a few days.
‘China is the worlds largest oil importer and worlds second biggest economy’
China is the worlds largest oil importer and worlds second biggest economy and they usually use about 14 million barrels of oil a day. Their consumption is now down by 20% so far and could look to fall further.
The response of the large oil producing countries is to reduce their production (so this means less supply) and thus push prices up to offset the losses they are facing in China as they try to keep their profits high. It is as yet unclear what that means for the long term petrol price future in South Africa. For now, in the short term, the fuel prices are falling. 93 & 95 are both going down by 13 cents/litre (not by 20% locally mind you) and diesel is dropping by 5 cents/litre as of 5 February 2020.
The volatility of the Rand vs the Dollar is also a big factor in working out petrol prices. The Rand has also been on the international rollercoaster ride that has been caused by the appearance of the Corona virus.