Oil dropped more than 3% due to the fear of the Coronavirus

On Monday, fears have renewed that the Coronavirus will harm global growth. It has rocked the commodity markets again, with oil prices tumbling.

Oil led the losses on Monday, dropping more than 3% in London and New York. Chinese fiscal stimulus and new warnings to supplies from Africa and Latin America have resulted in the longest run of Brent crude.

The world’s biggest oil producers have collapsed. The OPEC+ alliance led by SA has struggled to come to terms on a collective response, ignoring the idea of an early emergency gathering amid opposition from Russia.

The latest news reported that South Korea discovered hundreds of new infections. South Korean President Moon Jae-in issued the highest level of national alert and ordered new resources to tackle the outbreak. At least 12 people died in Iran. In Europe, Italy is struggling to contain a spike in cases. Tedros Adhanom Ghebreyesus, the general director of WHO, said that the increase in cases in South Korea, Iran, and Italy is also a matter of concern and how the virus is now reaching other parts of the world.

Chinese President Xi Jinping said that the current epidemic situation is still complex and severe. The work to prevent and control it is at the most critical stage. As of Monday, there were at least 77,150 confirmed cases in China, bringing the global sum to more than 79,000, with the death toll at 2,620.

The virus is a severe warning for investors

The more widely the deadly virus spreads outside China, the more it raises the threat of a global pandemic. Central bankers from the world’s largest economies and finance chiefs see downside risks persisting.

Commodity markets had started to recover from lows hit earlier in the month when China’s virtual closedown threw supply chains into chaos. International Monetary Fund removed its global growth forecast and warned that it’s also looking at more terrible scenarios. Investors are concerned that risks to raw-material demand are worsening.

Norbert Ruecker, head of economics at Julius Baer Group Ltd. in Zurich, said that Commodities are witnessing another risk-off day as coronavirus concerns boil up. The oil market remains concerned about demand, while the flight to safety pushes gold to new highs.

The havoc wreaked by the virus is a severe warning for investors since it spreads outside Asia. Oil demand in the world’s biggest importer collapsed as Beijing restricted travel and shut down factories. Shippers seek to divert cargoes elsewhere.