With crude oil demand depleting in China due to coronavirus spread, OPEC and ally nations have found themselves in the middle of a strange problem. With a demand slump, there is a mounting pressure on these nations to cut oil prices but the same might not be in the pain threshold of OPEC members, investment services company Motilal Oswal said in a report on Monday. "Higher prices by OPEC decision would slow down recovery from Covid-19, especially in China and broader Asia, their most important market," the report said. On the other hand, if OPEC decides to keep the prices at the current levels, "it will start hurting economies of the Middle east specially Iran, Iraq where the cases of Coronavirus has led to slowdown and stoppage of transportation," the report added.
Meanwhile, the outbreak of coronavirus brought some relief to air turbine fuel prices. With a demand slump, there is a drop in the jet fuel prices bringing some relief to India'a aviation industry which has been reeling under steep ATF rates. The softening of crude oil prices reflected on the aviation turbine fuel (ATF), ICRA reported. From Rs 64,323 on 1 January 2020 to Rs 63,449 on 1 February 2020, the ATF prices slipped, according to data from Indian Oil. A $1 drop-in ATF prices means a positive impact by 0.5-0.7% on the profit margins of carriers. However, the coronavirus outbreak has also hit passenger numbers with fresh cases of coronavirus reported European countries such as Austria, Croatia, Greece, Norway, among others.
The deadly virus has so far claimed over 3,000 lives globally and has also spooked the markets with Sensex closing 939 points down from the day's high as soon as reports of fresh cases emerged in National Capital Delhi and Telangana. Nifty also ended below 11,150.