Middle East states in line for $1.3 trillion windfall from extra oil revenues

theguardian.com:

Middle Eastern states are to land a $1.3tn (£1.09tn) windfall from extra oil revenues over the next four years, according to the International Monetary Fund.

The IMF said on Friday it expected oil and gas exporters in the region, notably the Gulf states, to benefit from high prices and opportunities to ramp up their market share.

The oil and gas sector is in flux following Russia’s invasion of Ukraine, which has upended markets and sent prices soaring. Russia has increased exports of oil to Asian nations, while Vladimir Putin’s tactic of limiting gas supplies into Europe has left countries seeking new supply sources.

Jihad Azour, the IMF’s director for the Middle East and north Africa, told the Financial Times that countries in the Middle East could expect to receive $1.3tn more in cumulative revenues than was forecast before the invasion of Ukraine.

He said Gulf states needed to use the windfall to “invest in the future”, including efforts to switch towards greener energy sources. “It’s an important moment for them to  … accelerate in sectors like technology [domestically] as this is something that will allow them to increase productivity,” Azour said.

“In addition, their investment strategy could benefit from the fact that asset prices have improved for new investors, and the capacity to increase their market share in certain areas are also opportunities.”

The windfall is expected to benefit some of the world’s biggest sovereign wealth funds including the Qatar Investment Authority, Saudi Arabia’s Public Investment Fund (PIF), the Kuwait Investment Authority and Abu Dhabi’s Mubadala and ADQ.

Gulf states are expected to spend the proceeds of the oil boom on building huge infrastructure projects, as well as investing overseas.

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