Global demand for oil and iron ore hit hard by coronavirus

Global demand for oil and iron ore is falling as the coronavirus epidemic has brought industrial activity to a standstill in China, the world's manufacturing center.

Global oil demand is expected to decline by 435,000 barrels per day per year in the three months to March, the first quarterly decline in more than a decade, the International Energy Agency said in a report on Thursday. The IEA also cut its 2020 growth forecast by 365,000 barrels per day from its January forecast to 825,000 barrels per day, the lowest level since 2011.

China accounts for 14% of world oil demand. The latest report says global demand "has been hit hard by the novel coronavirus (COVID-19) and the widespread halt in China's economy."

The IEA predicts the virus outbreak is likely to weaken global demand by 1.1 million barrels per day, or just over 1% in the first quarter and 345,000 barrels in the second quarter. These projections are based on the assumption that demand will gradually normalize starting in the second quarter. But the watchdog has warned that the epidemic is ongoing and accurate analysis is difficult.

The jet fuel market has been hit by the suspension of Chinese flights. The benchmark for Asia, jet fuel for Singapore is trading at around $ 65 a barrel, down 10% from its pre-Lunar New Year holiday in late January and the lowest in two and a half years.

Crude oil futures are trading at around $ 52 a barrel in New York, falling more than 20% since early January - when tensions between the US and Iran increased - to their lowest level in a year.

Manufacturers are wary. The Organization of Petroleum Exporting Countries on Wednesday lowered its forecast for growth in global demand for 2020 to 990,000 barrels per day, down 230,000 barrels per day below the January forecast.

The downgrade came after a technical committee of OPEC members and their allies - a group known as OPEC Plus - recommended cutting production by 600,000 barrels a day at the end of their February 4-6 meeting. This follows a 1.7 million barrels per day cut that the group agreed to implement starting in January.

Russia, a member of OPEC Plus, has not indicated its support for this recommendation.