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Energy markets present upside risk to the Gulf

The Gulf economies are key beneficiaries from the rise in energy prices caused by the Russia-Ukraine crisis. On an annualised basis, oil at $100pb would increase hydrocarbon export revenues by 7-10%-pts of GDP across the Gulf (relative to 2021). This could open the door for officials to loosen fiscal policy and support non-oil sector recoveries. Meanwhile, we think that OPEC+ will stay the course and raise its production quota by 400,000bpd on Wednesday, which will further benefit the Gulf as higher oil output will strengthen GDP via higher mining output. If anything, global energy prices are likely to rise further if the conflict continues to escalate and the Gulf producers may ramp up output more quickly to stabilise the oil market. These present upside risks to our GDP growth forecasts across the region. EM Drop-In (Thur. 3 March, 15:00 GMT): We’re discussing the impact of Russia-Ukraine on emerging markets in a special 20-minute briefing this Thursday. Registration details.
James Swanston Middle East and North Africa Economist
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