The International oil benchmark, Brent crude, plunged to its lowest level in more than three months on Monday on fears that China’s deadly coronavirus would hit demand in a market that already has plentiful supply.

Brent, against which Nigeria’s crude oil is priced, had risen above $70 per barrel earlier this month following the killing of an Iranian general, Qassem Soleimani, by the US on January 3.

The 2020 budget, which was signed by the President, Major General Muhammadu Buhari (retd.), in December was based on oil production of 2.18 million bpd with an oil price benchmark of $57 per barrel.

The global benchmark tumbled to $59.56 per barrel as of 4.40pm Nigerian time, while the US West Texas Intermediate fell to $53.26.

Coronavirus is the latest upheaval for the oil market, which has been struggling with demand concerns for months.

Investors are selling crude and other commodities amid a broad withdrawal from riskier assets and fears the virus will curtail fuel consumption as travel is restricted, according to Bloomberg.

“A supply glut of fuel in China would filter through to the rest of the world through exports and on that basis, the market is reacting in this defensive manner,” the Head of Commodity Strategy at Saxo Bank A/S, Ole Hansen, said.

“The Saudis can try to stem the sell-off but it’s being driven by the need to mitigate losses that will be difficult to control.”

Meanwhile, members of the Organisation of Petroleum Exporting Countries are considering deeper production cuts, or extending their existing deal in response to a slump in prices caused by the outbreak of coronavirus in China, according to a source in the group.

“The next two weeks are very critical for not only the oil market but the global economy. There is right now a discussion among the ministers of OPEC+ of watching the market closely and preparing to do anything if there is a need for it,” the OPEC source said on Monday, according to S&P Global Platts.

The remarks followed a statement on Monday from Saudi Arabia’s Oil Minister, Prince Abdulaziz bin Salman, aimed at calming the market after Brent crude dropped almost 3.5 per cent to below $58 amid fears of a wider economic impact of the virus, which has killed over 80 people in China and shut down the country.

The kingdom has “the capability and flexibility needed to respond to any developments, by taking the necessary actions to support oil market stability if the situation so requires,”  Abdulaziz said in a statement carried by the Saudi Press Agency.

According to Abdulaziz, the kingdom is closely monitoring the developments in the global oil market resulting from the gloomy expectations about the impact of the coronavirus outbreak on the Chinese and the global economy and oil market fundamentals.

The OPEC-led alliance of oil producers, dubbed OPEC+, is currently in the midst of trimming 1.7 million bpd of oil from the market through to the end of March to help soak up excess supply.

OPEC+ members will next meet in Vienna March 5-6 to discuss policy and output levels.