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The outbreak of a new strain of coronavirus in China could have a negative impact on crude oil demand, cutting the price by $3 per barrel, Goldman Sachs told its investors in a note. Crude oil prices today have hit the lowest point in a month, with Brent crude shares falling to $62.34, while the price for WTI was around $55.79.

According to the Goldman Sachs senior commodity strategist Damien Courvalin, the global oil demand could potentially fall by 260,000 barrels per day, hitting the aviation sector the hardest.

He wrote: “Ultimately we expect jet fuel markets — including cracks, regrade and Asian differentials — to decline most if this outbreak persists given the likely decline in regional air travel.”

Analysts at London-based consultancy firm Energy Aspects said they do not expect the oil demand to fall significantly as the virus has not yet triggered the restrictions on travel and trade that were set in place during the 2002-2003 SARS crisis.

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By GlobalData

Energy Aspects said in a research note published today: “While the SARS outbreak was estimated to have impacted up to 0.26 mb/d of oil demand globally, according to anecdotal reports, we currently do not expect global oil demand to fall significantly as a result of the coronavirus.”

Voluntary trip cancellations are expected, said Energy Aspects, but as the spread of the coronavirus has been minimal outside of China, it should not impact significantly the global demand for transportation fuel. “The World Health Organisation (WHO) is currently hesitant to declare the coronavirus a public health emergency, meaning airline cancellations remain unlikely.”

Even though the Chinese government this time has taken a more efficient approach to the spread, the firm said, if Chinese authorities decided to implement more aggressive measures to contain the coronavirus outbreak, global oil demand could be more affected.

“In a worst-case scenario that assumes the outbreak spreads across the nation, we expect jet demand growth to slow to 20,000 b/d year-on-year after having grown by 75 thousand b/d year-on-year in H2 2019,” Energy Aspects said in its report. It added it is monitoring the situation as it unfolds.

Originating in Wuhan – the capital of China’s Hubei province with a population of more than 11 million people – the coronavirus has spread to other countries, including Japan, South Korea and the US. According to the latest reports, 582 cases have been confirmed including 17 deaths, prompting Chinese authorities to impose a lockdown on Wuhan and some other cities.