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Price of oil falls 20% amid OPEC dispute, coronavirus outbreak

Click to play video: 'How COVID-19 may impact your pocketbook' How COVID-19 may impact your pocketbook
WATCH ABOVE: How COVID-19 may impact your pocketbook – Feb 26, 2020

Oil prices are plunging amid worries that an OPEC dispute will lead an economy weakened by COVID-19 to be awash in an oversupply of crude.

Brent crude, the international standard, lost $8.77, or 19.3 per cent, to $36.50, as of 7:23 p.m. Eastern time on Sunday after earlier touching its lowest price since early 2016. Benchmark U.S. crude fell $8.11 to $33.17.

The dramatic losses follow a 10.1 per cent drop for U.S. oil on Friday, which was its biggest loss in more than five years. Prices are falling as Saudi Arabia, Russia and other oil-producing countries argue how much to cut production in order to prop up prices.

READ MORE: Oil price nosedives after OPEC, Russia fail to agree on massive output cut

Demand is falling as people cut back on travel around the world. The worry is that the new coronavirus will slow economies sharply, meaning even less demand.

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It’s been a brutal and dizzying couple weeks for financial markets worldwide. The U.S. stock market is down 12.2 per cent since setting its record last month on worries about how much corporate profits will fall because of COVID-19.

Click to play video: 'COVID-19: The economic challenges posed by the virus' COVID-19: The economic challenges posed by the virus
COVID-19: The economic challenges posed by the virus – Mar 8, 2020

The virus usually leaves people with only mild to moderate symptoms, but because it’s new, experts can’t say for sure how far it will ultimately spread and how much damage it will do, both to health and to the economy. The number of cases has reached 109,000 globally, and Italy on Sunday tried to quarantine a region holding more than a quarter of its population in hopes of corralling it.

READ MORE: Morneau insists economy can handle coronavirus as economist urges fiscal caution

If the number of new infections slows in other parts of the world as it has in China, if the U.S. jobs market remains as solid as it’s been and if all the unease in markets ends up creating just a short-term dip in confidence among shoppers, all this may recede quickly. But those are a lot of potential pain points.

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“There are more if’s than at any other time in this 11-year bull market,” say strategists at BTIG.

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