IMF Sees Bumper Year For Arab Oil Producers, Risk For Others

The world’s economy is forecast to grow around 3.6% this year, but Arab oil exporters are seeing a windfall from high energy prices that will buoy their economies and replenish their financial reserves this year and next, according to a report released Wednesday by the International Monetary Fund (IMF), Aya Batrawy reported for the Associated Press (AP).

Photo Insert: An oil drilling rig in Saudi Arabia

Those hard-hit in the Middle East, however, are oil importers and countries like Egypt that also rely heavily on food imports from the Black Sea region, where Russia’s invasion of Ukraine has impacted exports like sunflower oil, barley, and wheat worldwide.

The war has caused wheat prices to soar as farmers in Ukraine were forced to pick up arms, stop farming, or have been unable to export their grains due to blocked ports and roads.

Higher energy prices, though, spell fortune for the region’s oil producers, like Saudi Arabia where economic growth is expected to hit 7.6% this year. Kuwait, another country highly dependent on oil revenue, is forecast to see 8% growth in 2022, a notable reversal from the just 1% growth its economy saw last year and the nearly 9% contraction its economy saw in 2020.

The IMF’s figures forecast that Iraq will see the biggest expansion to its economy in the region, with 9.5% growth projected this year.

As a whole, the IMF expects that in the next five years, the level of additional inflows and financial reserves to Mideast oil exporting countries will exceed $1 trillion, Jihad Azour, director of the Middle East and Central Asia department at the IMF, told AP.

The IMF’s projections are based on a number of assumptions, including that the price of oil will average roughly $107 a barrel in 2022 and trade around $92 a barrel in 2023.

Gulf Arab oil exporting states are projected to produce some 18 million barrels of oil per day this year, with around 14 million barrels of that for export. Most of the barrels will be produced and exported by Saudi Arabia.

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