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Energy-rich Middle Eastern countries, according to the forecasts of the International Monetary Fund, increased oil It will generate an unexpected $1.3 trillion revenue due to its prices. Wealth funds fed by oil revenues are also expected to grow in Gulf countries, especially in Saudi Arabia. “The cumulative oil revenues of the region’s oil and gas exporters, especially the Gulf countries, will increase by $1.3 trillion by 2026,” Jihad Azour, IMF’s Middle East and North Africa (MENA) Director, told the Financial Times.
“The Gulf’s wealth funds will be revived with oil”
The Gulf region, where the world’s largest oil and gas producers are located, also has the world’s largest wealth funds. Saudi Arabia’s Public Investment Fund (PIF), Qatar Investment Authority, United Arab Emirates’ Abu Dhabi Investment Authority, funds such as Mubadala and ADQ, Kuwait Investment Authority are some of them. The $620 billion PIF, chaired by Saudi Prince Mohammed bin Salman, invested more than $7.5 billion in US equities in Q2. Stocks he has invested in during falling share prices include companies like Amazon, PayPal and BlackRock. The region’s wealth funds have similarly invested in areas such as technology, health, life sciences and clean energy. IMF MENA Director Azour said that “Gulf countries use the additional revenues from oil to ‘invest in the future’ and this is an important trend that will increase the efficiency of the regional economies.”
Saudi Arabia will have a current account surplus in 9 years
The PIF will be one of the biggest winners of the oil surge, and the budget surplus will hit a record 5.5 percent of GDP this year, according to IMF projections. Saudi Arabia’s economy will run a current account surplus for the first time since 2013 thanks to oil prices. In addition, according to IMF projections, Saudi Arabia will grow by 7.6 percent this year, which will be the fastest growth in the last decade. PIF’s investments will exceed the government’s investments in 2022. According to the IMF report, the Gulf Cooperation Council, which includes Saudi Arabia, United Arab Emirates, Kuwait, Bahrain, Qatar and Oman, will grow by 6.4 percent this year after 2.7 percent growth in 2021.
Although oil fell 30% from the June peak, it did not move away from $ 100
The recovery after the war and the pandemic had increased oil prices. Although oil prices dropped by $30 from June peaks due to recession concerns, they remain close to $100. The demands of the USA from the Gulf countries to “increase production” continue to be unrequited for now. Saudi Aramco, the oil giant of Saudi Arabia, announced a record profit of 48.4 billion dollars for the second quarter of 2022 last week. According to Bloomberg news, this is the highest quarterly profit ever made by a listed company. The company’s net income increased by 90 percent compared to last year. Ibrahim Elghitany, an energy expert operating in Abu Dhabi, said that the increase in oil was “for the royal”.gold It is an opportunity” and points out that it will bring huge current account surpluses that Saudi Arabia will need to finance non-oil development plans for its economy, which it is trying to differentiate from oil.
IMF asks Saudi Arabia to remove energy subsidies
The Organization of the Petroleum Exporting Countries and their allies (OPEC+), including Russia, turned a deaf ear to US President Joe Biden’s calls to “increase production”. Now, the International Monetary Fund is asking Saudi Arabia to remove the upper limit on domestic fuel prices after oil prices, which increase inflation all over the world, cause a livelihood crisis. Last year, Saudi Arabia started to impose caps on fuel prices to mitigate the effects of the livelihood crisis and protect its citizens. Saudi Arabia, which aims to transform into a zero carbon economy by 2060, “must allow energy prices in the domestic market to increase in order to reduce domestic consumption and meet emissions targets”, according to the IMF. Amine Mati, director of the IMF mission to Saudi Arabia, said in an interview, “A great yield can be gained by ending the current incentives. “Saudi Arabia is in a good position to raise energy prices further, in line with the idea of green transition and reducing emissions,” he said.
The share of oil in electricity production has increased 5 times in 22 years
An important reason why the IMF asked Saudi Arabia to remove price limits is that consumption will increase due to the use of air conditioners in the summer, and that oil still has a large share in electricity production. More than 40 percent of Saudi Arabia’s electricity is produced with oil, and oil use in the Saudi energy sector has increased by 500 percent since 2000, according to the report in Bloomberg. In the Middle East, oil demand increases by 10 percent in summer and spring due to the use of ventilation. Saudi Arabia has the lion’s share of this seasonal increase with 75 percent.
Europe’s diesel imports from the Middle East reach the peak of 3 years
According to Vortexa data, which monitors tanker data, diesel fuel imports of European countries from the Middle East will reach the highest level in more than three years in August. The main reason is that it has been going on for months. energy bottleneck. However, jet fuel imports are expected to decline, unlike diesel. Europe is expected to import 1.67 million tons of diesel fuel this month, the highest volume since June 2019. Europe’s jet fuel imports, on the other hand, are preparing to drop to 457 thousand tons with a 79 percent decrease in August due to cancellations in the aviation sector. This is the lowest level since February. The total refined fuel exports in the Middle East are expected to decline to 2.12 million tons in August, despite the 934 thousand tons exported to Europe. Carrying a total of 851 tons of fuel, the tanker set off for the Suez Canal to reach Europe in September. 15 more tankers were reserved by European countries to carry 1.1 million tons of cargo.