Barclays sees downside risks to oil prices due to virus outbreak

The potential economic fallout from the coronavirus outbreak in China could dent oil demand and push oil prices lower, analysts at Barclays said on Tuesday. 

The bank sees a $2 per barrel downside to their full-year Brent and WTI forecasts of $62 per barrel and $57 per barrel, respectively, according to Reuters. 

Key quotes

If air passenger traffic in China declined by half in the first quarter of 2020, it would likely lead to 300,000 barrels per day year on year decline in jet-kerosene demand from China.

The Organisation of the Petroleum Exporting Countries and other allies could step in to tighten markets, in case the fall in demand is more acute.

The geopolitical risks to global supplies remain high as U.S.-Iran tensions could continue to gradually escalate and oil production in Libya could fall further if the blockade of key infrastructure facilities continues.

At press time, a barrel of Brent oil is changing hands at $59.35 and WTI crude is trading at $54.00 per barrel.