Russia President Vladimir Putin’s invasion of Ukraine has lifted crude prices over $105 a barrel for the first time since 2014, extending gains earlier propelled by economies around the world reopening after coronavirus lockdowns, reported Bloomberg.
The IMF estimates prices at that level would ensure that most of the main oil producers in the Middle East record a budget surplus.
The fighting in Europe means OPEC member states like Saudi Arabia and the UAE are set for an even bigger windfall, and there is a chance that Bahrain could record a balanced budget for the first time since 2008, if crude remains elevated.
Saudi Arabia, which needs oil at about $72 a barrel to balance the books, already said it expects to record a surplus this year. For the UAE, that figure is about $67 a barrel. Bahrain needs prices in excess of $106 a barrel.
Food prices
The invasion is also causing food prices to fluctuate, and risks pushing families across the MENA region into severe hunger.
Russia is the largest exporter of wheat in the world, while Ukraine has significantly climbed the ranks in grain exports over the last decade. Both countries account for roughly 29% of the global wheat export market.
As the world’s largest importer of wheat, Egypt could be severely affected. Almost 85% of its wheat supplies are from Russia and Ukraine. Algeria, Tunisia and Libya, which are also significant wheat importers, are expected to be impacted as well.
The UN World Food Programme spokesperson Abeer Etefa told The Telegraph, “Food prices are already at a high. We’re worried that people in the Middle East and Africa could become even more vulnerable if supplies are disrupted.”
An extensive conflict or a blockade of the Black Sea would mean that supplies from Ukraine would need to be replaced by those from another source, resulting in a hike in prices.
Tourism
The war may see tourism revenue dry up and direct flights cancelled for some of the most popular Russian tourist spots in the Middle East. Prior to the attack, Russia sent more tourists to Egypt than any other country, according to a Middle East Eye report. Russian tourists had been expected to generate roughly $1.2bn for the GCC by 2023, according to data published ahead of the trade fair Arabian Travel Market 2020.
Ukraine is home to thousands of students from across MENA, many of whom were waiting to be evacuated when Russia invaded on 24 February. M