Oil could drop $3 if virus plays out like SARS – Goldman Sachs

The US investment banking giant, Goldman Sachs, assesses the impact of a potential SARS-like epidemic on oil markets.

Key Quotes:

“The virus that originated in Wuhan could result in global demand falling by 260,000 barrels a day in 2020, with jet fuel accounting for around two-thirds of the loss.

That would probably lead to a $2.90 a barrel drop in oil prices. The bank’s projections translate the estimated SARS demand impact into 2020 volumes.

While an OPEC supply response could limit the fundamental impact from such a demand shock, the initial uncertainty on the potential scope of the epidemic could lead to a larger price sell-off than fundamentals suggest.”