On the news, crude oil futures plunged by around five percent, recovering slightly in the hour that followed. BP said coronavirus is having a lasting impact on its business, alongside the global economy.
Its ong-term price assumptions are down by around 30 percent.
Meanwhile, global stocks took a brutal hit after a rise in outbreaks in the world’s biggest economies raised concerns of a second wave of the coronavirus.
Investors are digesting news from the weekend that the UK Government is considering relaxing social distancing measures. Rishi Sunak said yesterday that the government wanted consumers to “shop with confidence” when non-essential retailers are opened later on today. The move could see the two-metre rule halved.
Public health officials have indicated they would be cautious about reopening shops.
Sunak told Sky News yesterday: “Ultimately, it is for ministers. We are the people who are elected to make decisions in this country. People should hold us responsible and accountable for making those decisions. I think that people are comforted and have confidence in those decisions if they know that we are taking advice from our scientists.”
Robert Carnell, head of research for Asia-Pacific at ING, told FT: “At a global level, this talk of second waves is misplaced, as daily new cases have been rising steadily since early May.
“Also, if globally, we are still in wave one, then it is possible that without a vaccine, the big wave is still lying out there somewhere waiting to hit.”
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8.15am update: European markets sink
European markets opened more than two percent down across the board. The FTSE moved 2.2 percent lower, while Germany’s DAX sank 2.6 percent.
New coronavirus infections in China have raised the prospect of fresh lockdowns. When the country first went into lockdown markets around the world faced a punishing selloff.
The pound remained steady against the euro, as prime minister Boris Johnson prepared for his showdown with Brussels.
7:40am update: Crude oil takes a hit as BP considers its place
Crude oil plunged around 5 percent as news broke that BP is set to take a hit of up to £14billion, as the coronavirus crisis hits oil demand.
This will take the form of a series of non-cash write downs and charges as it navigates sapped oil demand.
Long-term price assumptions are shifting, due to what BP calls “the pace of transition to a lower carbon economy and energy system”.
7:15am update: FTSE set to tank on open
The FTSE 100 is set to open around 1 percent lower later on, as investors parse the news on a spike in virus cases.
US stock futures suggest the Dow Jones Industrial Average will drop by 3.4 percent when it opens later on.
The S&P 500 was also set to drop nearly 3 percent.
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6am update: Oil drops as new coronavirus outbreaks raise fuel demand concerns
Oil fell more than 2 percent on Monday, extending losses from last week, as new coronavirus infections hit China and the United States, raising the prospect that renewed outbreaks of the virus could weigh on the recovery of fuel demand.
Brent crude futures fell 89 cents, or 2.3 percent to $37.84 a barrel by 0302 GMT, while US West Texas Intermediate crude futures were down $1.18, or 3.3 percent, to $35.08 a barrel.
The coronavirus pandemic started at the end of last year in the Chinese city of Wuhan.
The oil benchmarks fell about eight percent last week, their first weekly declines since April, as US coronavirus cases started increasing. Over the weekend, more than 25,000 new US cases were reported on Saturday alone as more states reported record new infections and hospitalizations.