Oil prices tumbled by almost a third when the first markets opened in Asia on Sunday evening, before the falls spread to Europe and the US, where the New York Stock Exchange was suspended for 15 minutes following a 7 per cent crash at the start of trading.
Billions were wiped off companies as traders were spooked by Saudi Arabia announcing plans to flood markets with extra oil supply.
It came after the Middle Eastern oil giant and other nations in the Organisation of the Petroleum Exporting Countries failed to reach an agreement with non-member Russia on Friday in attempts to curb output in the wake of the coronavirus outbreak.
Brent crude, the international benchmark, at one stage went below $30 (£22.88) per barrel, signalling the biggest one-day drop in percentage terms since the start of the 1991 Gulf War. The price later settled at $36.08 (£27.06), around 20 per cent down on the previous day.
In London, FTSE 100 companies lost £125bn – adding to heavy losses over coronavirus fears – after stocks plunged by more than 8 per cent in early trading. The index closed the day down 7.7 per cent, the the biggest single-day fall since the 2008 financial crisis.
It means the FTSE 100 has fallen by almost 20 per cent in just over two weeks, leaving it at a four-year low at a level not seen since the EU referendum result.
Neil Wilson, chief market analyst at Markets.com, said: “This will be remembered as Black Monday. If you thought it couldn’t get any worse than the last fortnight, think again. The blood really is running in the streets, it’s utter carnage out there.
“The oil price shock has totally unnerved investors, while Italy’s decision to quarantine 16 million citizens in the north of the country has left markets feeling like the coronavirus outbreak is out of control – where next? The UK is preparing for the worst.”
Within the first half an hour of trading, 15 FTSE 100 companies lost more than 10 per cent of their value.
Smaller indexes – the FTSE 250 and FTSE 350 – were down by 6.5 per cent and 7.3 per cent respectively, as US markets opened, with oil majors taking the brunt.
BP, Shell and British Gas owner Centrica were all some of the biggest casualties, with shares dropping between 15 per cent and 20 per cent through the day.
On Wall Street, Exxon Mobil and Chevron were down more than 9 per cent, while banks such as JP Morgan tumbled 12 per cent and Citigroup slumped 11 per cent.
Elsewhere, the ASX 200 in Australia plunged by over seven percentage points, while the Nikkei 225 in Japan dropped by more than 5 per cent.
The Russian ruble traded at 74.8861 per dollar on Monday afternoon, its biggest collapse since the nation’s currency crisis in December 2014.
“It is pretty nuts right now,” said Amy Wu Silverman, equity derivatives strategist at RBC Capital Markets. “It feels like 07-08 when every weekend it felt like the bottom was falling out.”
The oil price crash, if sustained, would upend politics and budgets around the world, and deepen fears of a recession.
Bank of America Merrill Lynch described coronavirus was like a “slow-moving train wreck” and said markets had gradually come to realise the “magnitude of the events unfolding”.
Additional reporting by agencies
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