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The flow of oil traveling from Latin America to China has stopped in the wake of the deadly outbreak of the coronavirus that has sunk oil prices to three-month lows, with no oil making its way from Brazil or Colombia to China since last week, according to Bloomberg.
Chinese refineries are responsible for taking one-third of all oil from Brazil, Colombia, and other Latin American countries.
The demand for jet fuel and gasoline stemming from travel restrictions that have been put in place in an effort to stop the virus from spreading is expected to fall sharply, which will inevitably catch up to the refineries who are expected to cut back production at some point.
Brazil is the main Latin American supplier of crude oil to China--particularly to the independent refiners known as teapots, who are most exposed to the effects of reduced demand.
According to Bloomberg, the death toll from the virus has climbed to 170, with more than 8,000 infected with the coronavirus in China.
So much so is the fear surrounding the effect on oil demand and prices that OPEC announced yesterday that it is considering moving up its March meeting as the effects of the deadly coronavirus continues to exert strong downward pressure on oil prices.
The cartel was said to already be discussing an extension of the current production cut agreement, and that all options were on the table.
Even with Libya’s oil production plummeting by nearly 1 million barrels per day (bpd) due to the port blockade by forces loyal to General Khalifa Haftar, oil prices have seen downward pressure over the past week and a half as fears of oil demand destruction currently outweigh supply outages.
Earlier in the week, Petrobras said it had suspended all employee travel to China due to the virus, but was quick to add that shipments of oil to China would continue.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.