News ID: 323598
Published: 0321 GMT August 19, 2022

Middle East states set for $1.3t oil windfall, says IMF

Middle East states set for $1.3t oil windfall, says IMF
AHMED JADALLAH/REUTERS



The Persian Gulf is home to some of the world’s biggest oil and gas exporters, and several of its largest and most active sovereign wealth funds.

Energy-rich Middle East states are set to reap up to $1.3t in additional oil revenues over the next four years, according to the International Monetary Fund, as they enjoy a windfall that will bolster the firepower of the region’s sovereign wealth funds at a time when global asset prices have sold off.

The IMF’s projections underscore how high energy prices driven by Russia’s military operation in Ukraine are buoying the Persian Gulf’s absolute monarchies while much of the rest of the world grapples with soaring inflation and fears of recession, Financial Times reported.

Jihad Azour, IMF director for the Middle East and north Africa, told the Financial Times that relative to expectations before the war in Ukraine, the region’s oil and gas exporters, particularly Persian Gulf states, “will see additional cumulative oil revenues of $1.3t through 2026”.

The Persian Gulf is home to some of the world’s biggest oil and gas exporters, and several of its largest and most active SWFs. These include Saudi Arabia’s Public Investment Fund, the Qatar Investment Authority, Abu Dhabi’s stable of vehicles, including the Abu Dhabi Investment Authority, Mubadala and ADQ, and the Kuwait Investment Authority.

The $620b PIF, which is chaired by Saudi Crown Prince Mohammed bin Salman, invested more than $7.5b in US stocks in the second quarter, including in Amazon, PayPal and BlackRock, as it sought to take advantage of falling stock prices, according to market filings.

Persian Gulf SWFs were similarly active during the pandemic as they looked to capitalise on the market volatility triggered by the COVID-19 crisis. During the global financial crisis in 2009, they took advantage of the turmoil to snap up stakes in distressed Western companies.

In recent years, many of the funds have been focusing on sectors such as technology, healthcare, life sciences and clean energy as governments pursue returns on investments, but also seek to diversify economies and develop new industries.

Azour said it was important that the Persian Gulf states used the latest windfall to “invest in the future”, including preparations for the global energy transition.

But he added that it was critical that they maintained fiscal discipline and momentum on reforms designed to reduce their countries’ dependence on oil.

 

 

 

 

 

 

 

   
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