The sell-off in oil isnt entirely comparable to what happened with SARS, says CEO

  • There’s a “bear stampede” in the oil market as a new coronavirus spreads, but that may not be directly comparable to the sell-off in 2003 associated with the outbreak of SARS, according to Vandana Hari, CEO of Vanda Insights.
  • “It’s natural, very human to … hark back to SARS,” Hari said. But there was “another, much bigger influence” in the oil market back then — the U.S. invasion of Iraq.
  • She also said the sell-off in oil is based on “a lot of fear and panic,” and might be “premature and overdone.”

There’s a “bear stampede” in the oil market as a new coronavirus spreads, but that may not be directly comparable to the sell-off in 2003 associated with the outbreak of severe acute respiratory syndrome (SARS), according to an energy analyst.

Oil futures slid for a sixth session on Tuesday amid reports of a rising number of cases and casualties.

“It is based on a lot of fear and panic,” Vandana Hari, founder and CEO of energy markets consultancy Vanda Insights, told CNBC’s “Capital Connection” on Tuesday. “That fear and panic will probably not die down anytime soon.”

“It’s natural, very human to … hark back to SARS,” she said. “However, when it comes to the oil market, I don’t think it’s entirely comparable.”

Energy prices also slumped during the SARS outbreak in 2003. But she said there was “another, much bigger influence” in the oil market back then — the U.S. invasion of Iraq.

Brent crude went down from the mid-$30s to the mid-$20s at the time, she said. “The fear premium just before the invasion had peaked, then suddenly it dropped off quite rapidly when it realized that, though Iraqi production was affected, OPEC members rallied and pumped enough oil.”

The novel coronavirus also appears to be less severe, she said, noting that the virus has not spread the way SARS did outside of China.

You may like

In the news
Load More