Brent crude was at $56.26 a barrel by 9.26 am GMT, down 36 US cents. Prices dropped by more than a $1 earlier in the session to $55.42, the lowest since January 2019.

On the first day of trade in China after the New Year holiday, investors erased $393bn from China's benchmark stock index on Monday, sold the yuan and dumped commodities as fears about the virus dominated the markets.

Iranian oil minister Bijan Zanganeh said the spread of the coronavirus had hit oil demand and called for an effort to stabilise oil prices.

“The oil market is under pressure and prices have dropped to under $60 a barrel and efforts must be made to balance it,” Zanganeh said.

He said Iran would agree to hold an earlier Opec meeting if the rest of the group's members agreed to oil production cuts. Opec and its allies, a group known as Opec+, are considering meeting in February instead of March.

Joint Technical Committee (JTC), made up of members of Opec and other producers, is scheduled to meet in early February to assess the virus effect, Opec+ sources said. “The market needs assurances that the supply/demand equation remains in balance for prices to hit a floor. This suggests a commitment from Opec not just to extend oil supply cuts, but even implement deeper ones beyond March,” said FXTM analyst Hussein Sayed.

As the coronavirus outbreak hit fuel demand in China, Sinopec Corp, Asia's largest refiner, told its facilities to cut throughput this month by about 600,000 barrels per day.

Independent refineries in Shandong province, which collectively import about a fifth of China's crude, also slashed output by 30% to 50% in just over a week, executives and analysts said.

“Clearly travel restrictions and the extended shutdown of large parts of the Chinese industrial sector have weighed on oil demand and this is reflected in the weakness that we are seeing in the ICE Brent time spreads,” ING analyst Warren Patterson said.

The premium of the first-month Brent contract to the second-month contract narrowed to 9c a barrel on Monday from 70c a month ago, indicating that traders are not concerned about supply tightness because of the demand effect of the coronavirus.