As worries over fast spreading coronavirus have hit financial markets and oil prices, with stocks from Wall Street to Tokyo falling, Saudi Arabia, the biggest oil producer, sees 'very limited impact' on global oil demand.

While three main US indexes closed down more than 1.5 percent, oil prices fell more than 2 percent, with Brent crude falling to $59.32 a barrel, as traders mainly fear a lack of demand if Chinese economy stalls and if segments that would boost demand for jet and gasoline are affected.

In a statement carried by official Saudi Press Agency (SPA), Saudi energy minister, Prince Abdulaziz bin Salman said: "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."

He said that the current impact on global markets, including oil and other commodities, is primarily driven by psychological factors and extremely negative expectations adopted by some market participants despite its very limited impact on global oil demand.

The coronavirus has killed 106 people in China. At least 44 cases have been confirmed abroad. The number of total confirmed cases in China rose to 4,515.

"Such extreme pessimism occurred back in 2003 during the SARS outbreak though it did not cause a significant reduction in oil demand," the energy minister said, adding, "The Kingdom of Saudi Arabia and other OPEC+ producers have 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."

Anxiety over supplies being affected by geopolitical risk in Libya and Iraq were surmounted by demand fears over the course of the last week. Political risk has sparked one-off moves in oil prices so far this but has failed to support prices at sustained high levels, Emirates NBD said in its market outlook.

(Writing by Seban Scaria seban.scaria@refinitiv.com, editing by Anoop Menon)

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