Oil prices have experienced their sharpest weekly decline in more than a year as risk aversion deepened across markets over fears of economic fallout from the China-originated coronavirus.

Brent, the London-traded global benchmark for crude oil, settled down $1.35, or more than 2 percent, at $60.69 per barrel on Friday. It hit a seven-week low of $60.26 in earlier trading.

New York-traded West Texas Intermediate (WTI), the benchmark for US crude, settled down $1.15, or 2.1 percent, at $55.59 per barrel.

Risk aversion triggered by the coronavirus has dimmed oil’s fortunes drastically after a 35 percent gain for WTI in 2019 and 24 percent for Brent.

This week, Brent fell 6.4 percent for its sharpest weekly decline since December 2018. The global crude benchmark has also lost 8 percent since the start of 2020, keeping open the possibility that it will finish January as its worst month since May last year when it lost 11.4%.

The Economist Intelligence Unit said in a report Thursday that the virus could cut between 0.5 to 1 percentage points off China’s gross domestic product growth this year, against a baseline forecast of 5.9 percent.

"When cities are placed under quarantine, and public transit is shut down, by definition that reduces economic activity and has a negative impact on energy demand, oil included", Raymond James analyst John Freeman said in a note to the firm’s clients. "Once there is evidence that the outbreak is contained and thus economic disruption subsiding, sentiment on oil should improve, bringing prices back up".

The United States, meanwhile, reported its second coronavirus case on Friday, saying a woman from Illinois was found infected after travelling back from the Chinese city of Wuhan, the epicentre of the infection. Earlier this week, a man from Washington state became the first US person to contract the virus upon returning from Wuhan.

US stocks’ top barometer, the S&P 500, closed down almost 1% on Friday, for its biggest drop since October, as investors dumped risk assets and piled into the safety of instruments such as government bonds and gold.

Specifically on the energy front, the outbreak has already downed demand for 200,000 barrels of refined oil products, estimated Claudia Galimberti of S&P Global Platts. In China’s Hubei Province, where the disease was first noted, the shutdown of transportation has probably eliminated about 50,000 to 70,000 barrels a day of demand, Galimberti noted.

Wall Street investment bank Goldman Sachs said on Tuesday that it anticipated a 260,000-barrel-per-day negative shock to global oil demand on average, including a 170,000-bpd loss of jet fuel demand, from the coronavirus.

Switzerland-based oil risk consultancy PetroMatrix has termed the virus the "Black Swan event of 2020", likening it to global contagions like the 1997 Asian Financial Crisis, the 2000 Dotcom Crisis, the 2001 attacks on the US, and the 2008 Global Financial Crisis among others.

In late December, an unknown type of pneumonia was first detected in Wuhan. Confirmed cases of the new coronavirus have also been recorded in the United States, France, South Korea, Japan, Singapore, Thailand, and Nepal. Some 39 people all over the world have died from the coronavirus so far, with over 700 having been infected.