Barclays has forecast a drop of as much as $2/barrel in crude oil prices over continued worries about the potential impact of the coronavirus outbreak across China and beyond. According to the bank, both UK Brent and US WTI crude oil could lose as much as $2 per barrel in value over tensions of how the spread of the virus could slow down economic growth.

So far, China has confirmed more than 5,000 cases while the death toll has crossed 100, even as the government tightens preventive measures by locking down cities and preventing travel to contain the virus. Despite these measures, Barclays expects crude oil demand to decline by 0.6-0.8 million bpd temporarily in Q1 2020 over coronavirus fears.

The bank anticipates that OPEC and its allies could step in to tighten the supply side of the market to stem further decline in crude oil prices. Meanwhile, geopolitical tensions in the Middle East are likely to continue supporting oil prices as the possibility of US-Iran relations worsening still remains on the horizon.