As the coronavirus continues spreading around the world, government and individual reactions to the virus are wreaking havoc with energy markets.

The coronavirus affects energy markets in a few ways. First, travel restrictions due to containment efforts decrease demand for jet fuel for planes and gasoline for cars. Second, manufacturing shutdowns decrease demand for fuel for plants and gasoline for trucks to ship goods. Third, closing schools, shopping centers, and public buildings decreases demand for electricity and fuel to run these buildings.

Energy markets react

The coronavirus is the biggest shock to oil demand since the 2008 financial crisis. The shutdown of large parts of China’s economy, combined with the spread of the coronavirus across the globe, has caused a sharp decline in manufacturing, flight activity, and vehicle traffic.

The outbreak has already caused some Chinese companies, such as China National Offshore Oil Corp. (CNOOC), to declare force majeure – declaring that a set of unpredictable events will stop them from fulfilling their original contracts. The company has declined to accept some cargoes of liquefied natural gas because its ability to import the fuel is inhibited from the virus’s impacts.

Other companies in China are either stockpiling LNG offshore or refusing deliveries, leaving suppliers scrambling to find new buyers.

In just one month, experts went from predicting the virus would reduce Chinese oil demand and broader jet fuel consumption to predictions of a possible recession. The response in oil prices has been significant. Brent prices hit a twelve-month low, with the near-term outlook looking grim and the forecast looking increasingly dark for the balance of the year.

A near-complete removal of Libyan oil from the market (reportedly beyond 800,000 bpd) and an escalation of sanctions against Venezuelan production have gone unnoticed as worries about the impact of the coronavirus on the global economy spread. Now, we have a price war between Saudi Arabia and Russia driving prices lower and increasing uncertainty in energy markets.

Maintaining calm in the storm

So, how do you keep your business running when the market around you is chaotic? How do you manage your business if you are forced to close its doors for two or more weeks?

Digitalization is the key. There has been a lot of hype about the benefits of digital transformation, but nothing demonstrates the value of a digital business more than a crisis that requires analyzing large amounts of real-time data and couples it with potential office closings.

A cloud-native platform like Eka’s Commodity Management Platform provides a digital platform for you to run your business. We often talk about the benefits of the platform – one connected data layer, advanced analytics, mobile access – in terms of making faster decisions. In the case of a disruption like COVID-19, faster decisions aren’t just a benefit, they are essential.

Every day, companies and countries are reacting. Last month, manufacturing plants in China closed to contain the virus. While some manufacturing plants in China are now reopening, this week Bethlehem’s Nativity Church closed, a British airline collapsed due to canceled flights, and schools across Italy closed. Shopping centers in Seattle, Washington are empty because people are avoiding crowds.

The impact of the virus is changing every day, and you need to monitor and evaluate market conditions in real time because everything is moving so fast. Manually aggregating and analyzing data just takes too long when you need answers now and tomorrow may look completely different.

Our digital platform connects your entire business – so you do not need to be in the same location as your trading partners, team members, systems and data. With 100% mobile access, you can get a real-time view of your business on demand – whenever and wherever needed – and run analyses quickly from any computer or mobile device. You can collaborate, sharing insights, creating contracts, and connecting with your entire value chain, ensuring your business keeps running even if your office cannot.

Modern technology delivers all the tools we need to manage market shocks. It’s time to take advantage of it.

Learn how Eka can enable your digital transformation.


Mary DeFilippe spends her days creating engaging content – blogs, white papers, articles, and more – that helps readers better understand new technology. She can frequently be found walking around the office listening to heavy metal music while pondering ideas for her next blog.