A US travel ban on European flights and pledges of further supply boosts from Opec sent oil prices crashing again on Thursday, adding to the growing misery of oil exporters and mayhem in global markets.
US President Donald Trump banned travel from Europe save from the UK — following the World Health Organization’s decision to declare the coronavirus outbreak a pandemic.
Cash-strapped Iran, which has been badly affected both by the virus and severe US economic sanctions that have squeezed its oil revenues, appealed for emergency funding from the International Monetary Fund (IMF) to help fight the outbreak.
The US travel ban is likely to further crimp demand for fuel as airlines suspend flights to lucrative US destinations and elsewhere.
And in a further blow to the battered oil market, the United Arab Emirates announced plans for a major production boost in solidarity with Saudi Arabia, which is leading an oil war against Russia.
Brent crude was trading around $33.50 per barrel in the midday London session on Thursday, down more than 6% on the day.
US West Texas Intermediate (WTI) was hovering just about $31 per barrel.
Both benchmarks have plunged 50% from highs reached in January. Oil had its biggest one-day fall in almost three decades on Monday after Saudi Arabia moved to abandon all output restraints to punish Russia for refusing last week to endorse fresh supply cuts aimed at propping up oil prices at a time of the devastating impact of the coronavirus endemic.
State-owned Abu Dhabi National Oil Company (Adnoc) announced plans to raise oil exports to more than 4 million barrels per day and accelerate a push to hike the UAE capacity by a quarter to 5 million bpd.
The Adnoc move follows a similar push by Saudi Aramco to boost both supplies and spare capacity in the hope of winning a quick market share battle against Russia and non-Opec producers.
Opec linchpin Saudi Arabia is also tempting European term-buyers with deep discounts in an effort to sell more of its rising supplies.
The output boosts are a fresh blow to an oil market hammered by the rapid spread of coronavirus and weal global economic activity.
Iran's Central Bank chief Abdolnaser Hemmati wrote on his Instagram page that "in a letter addressed to the head of IMF, I have requested five billion dollars from the emergency fund to help our fight against the coronavirus".
Iran is the most affected country after China and Italy.
Bjoernar Tonhaugen, head of oil markets at Norwegian energy consultancy, said: "Trump's announcement yesterday about banning citizens of many European nations from entering the US for 30 days has been taken very negatively by the oil market this morning for three reasons, one fundamental and two indirect effects on price formation.
"First, the direct negative impact on jet fuel demand will increase as additional flights will be cancelled.
"Second, it negatively impacts expectations for business activity and economic growth.
"Third, it leads to further loss of confidence in the governments’ handling of the fall-out and increases uncertainty about the extent of the virus impact on the overall economy, reflected in sharp falls in risk assets across the board this morning."
Tonhaugen continued: "Our initial assessment of the impact of cancelling transatlantic flights between the US and Europe is a direct loss of about 600,000 bpd per month in jet fuel demand."