LONDON, March 9 — World oil prices crashed today, fuelling a vicious selloff on stock markets which were already buckling under intense pressure over the spreading coronavirus outbreak.
Stocks tanked as the global oil market nosedived 30 per cent at one stage after top exporter Saudi Arabia slashed the prices it charges customers following a bust-up with Russia over crude production cuts.
The dollar slid versus the yen, seen as a safe haven investment.
The New York markets tumbled at the opening with the DJIA immediately down nearly six per cent, playing catch up with Europe where London, Paris and Frankfurt were all off more than eight per cent.
Shortly after the open in New York trading was halted for 15 minutes after losses hit 7 per cent.
“The markets have passed from panic mode into pure hysteria,” said Ayush Ansal, chief investment officer at trading firm Crimson Black Capital.
“Markets were at breaking point before Saudi Arabia’s decision to launch an oil price war but this latest development has taken them beyond that.”
Opec kingpin Saudi Arabia last week wanted Russia to join the cartel in deep production cuts after world oil prices slumped on forecasts of plunging demand because of COVID-19.
However, Moscow declined, triggering Riyadh’s move to preserve market share and sideline its close competitor — but it has created fresh market chaos.
“The war against the coronavirus is turning into a war for oil export markets,” said analyst Tamas Varga at oil broker PVM Associates.
The dizzying oil drop — the steepest since the 1991 Gulf War — sent investors fleeing for safety alongside mounting fears over the worsening coronavirus, which has seen Italy lock down a swathe of its north.
‘Black Monday’
“This will be remembered as Black Monday,” said analyst Neil Wilson at trading site Markets.com.
Italy’s stock market took the heaviest battering after a chunk of the county’s northern region was sealed off — including Milan and Venice — as authorities struggled to contain the spread and impact of coronavirus.
In exceptionally volatile trade, Milan’s FTSE MIB index shed more than 11 per cent in mid-afternoon trade.
As the disease claims more lives around the world, dealers are shedding riskier assets for safe havens, sending gold and the yen surging and pushing US Treasury yields to record lows.
While governments and central banks have unleashed or prepared stimulus measures, the spread of COVID-19 is putting a huge strain on economies and stoking concerns of a worldwide recession.
Trading floors in Asia were also a sea of red, with Tokyo plunging more than five per cent by the close, while Hong Kong shed 4.2 per cent. Sydney slumped 7.3 per cent.
Saudi equities tanked more than nine per cent with oil titan Aramco’s share price losing 10 per cent. Dubai and Kuwait stock markets sank a similar amount, while Abu Dhabi was almost eight per cent down.
Energy firms hammered
Oil majors also bore the brunt of a fierce wave of selling while other commodities firms nursed heavy losses.
Hong Kong-listed CNOOC tumbled 17 per cent and PetroChina more than nine per cent, while in Tokyo, Inpex dived 13 per cent. In Sydney, Santos dived 27 per cent and Woodside Petroleum tanked 18.4 per cent.
In London, BP shares dived 18.2 per cent and Shell 12.7 per cent at one stage. French energy major Total slumped 11.6 per cent.
Among miners, Anglo American shed 9.4 per cent and BHP Billiton sank 14 per cent.
Analysts meanwhile warned of further gyrations as the outbreak shows no sign of abating, with more than 110,000 people infected in scores of countries — including Italy, which is now the hardest-hit country outside China.
Key figures around 1140 GMT
Brent Crude: DOWN 21.4 per cent at US$35.75 per barrel
West Texas Intermediate: DOWN 21.9 per cent at US$32.45
Milan – FTSE MIB: DOWN 11.34 per cent at 18,459 points
London – FTSE 100: DOWN 8.4 per cent at 5,923
Frankfurt – DAX 30: DOWN 8.3 per cent at 10,578
Paris – CAC 40: DOWN 8.5 per cent at 4,701
EURO STOXX 50: DOWN 8.8 per cent at 2,943
Tokyo – Nikkei 225: DOWN 5.1 per cent at 19,698.76 (close)
Hong Kong – Hang Seng: DOWN 4.2 per cent at 25,040.46 (close)
Shanghai – Composite: DOWN 3.0 per cent at 2,943.29 (close)
Sydney – S&P/ASX 200: DOWN 7.3 per cent at 5,760.60
New York – Dow: DOWN 7.3 per cent at 23,979
Dollar/yen: DOWN at 101.34 yen from 105.39 yen at 2200 GMT
Euro/dollar: UP at US$1.1463 from US$1.1284
Pound/dollar: DOWN at US$1.3109 from US$1.3048
Euro/pound: UP at 87.39 pence from 86.48 pence
— AFP