Gulf economies to gain over $1.4t in extra oil profit in 4-5 years: IMF

Gulf oil exporting countries are projected to gain over $1.4 trillion in additional profit in the coming four to five years as oil rates keep soaring, according to a senior IMF official.

However, the war in Ukraine and related sanctions have triggered a sharp increase in commodity prices, which will add to the challenges facing countries in the Middle East and North Africa — particularly the region’s oil importers, Jihad Azour, Middle East and Central Asia Department at the IMF, wrote in blog.

After leaping to a peak of $130 per barrel following Russia’s invasion, oil prices are expected to settle at an annual average of around $107 in 2022, up $38 from 2021, according to the IMF’s latest World Economic Outlook. Similarly, food prices are expected to increase by an additional 14 percent in 2022, after reaching historical highs in 2021, he wrote.

The IMF official said he expects the oil price, compared to last year, to increase by 55 per cent, which will improve their growth prospects, but also it will be a big windfall in terms of capital flows. “If we look at the next four to five years to give you the order of magnitude, we are expecting more than 1tn to $1.4tn of additional revenues to oil exporting countries, especially to the GCC,” Azour was quoted as saying in a recent panel discussion.

Azour noted that the surge in oil prices comes at a precarious time for the region’s recovery.

“In our REO, we revised up our forecast for growth in the Middle East and North Africa as a whole by 0.9 percentage points to five per cent, but this reflects improved prospects for oil exporters helped by rising oil and gas prices.”

“For oil-importing countries, we marked down our projections, as higher commodity prices add to the challenges stemming from elevated inflation and debt, tightening global financial conditions, uneven vaccination progress, and underlying fragilities and conflict in some countries,” he said.

— issacjohn@khaleejtimes.com