Even as Aramco's CEO was insisting to anyone that would listen in Davos that the naysayers were wrong and that world oil consumption would not decrease in 2040, there was more bad news for oil producers.
Oil prices fell Thursday and Friday as the coronavirus originating in China put a dampener on the markets with investors worrying that the health crises could negatively impact fuel demand. Oil prices dropped to their lowest in weeks losing 1 per cent as panic spread that the respiratory virus, which Chinese authorities a struggling to contain might affect economic growth. At one point, Brent crude futures fell 1.3 per cent, while West Texas Intermediate futures lost 1.5 per cent, and more losses are possible if China's authorities do not get a grip of the health crises that so far has a death toll of about 25. But the virus poses a challenge not just for China, but other major destinations around the world including the UK and the US, as more suspected cases are being taken into quarantine around the world. Wuhan, the city of about 11 million residents where the virus is thought to have originated is in lockdown, with the Chinese New Year a few days away. This would have been a time of mass movement of people travelling out of the cities for the holiday. However, health crises could affect travel plans and reduce the demand for fuel. The reality is that regardless of what Aramco's Amin H Nasser has to say about global oil consumption, oil is now a very vulnerable commodity, and susceptible to things like this, as pressure mounts on governments to move away from fossil fuels.