Washington: Much of the international attention is focused on Russia’s invasion of Ukraine. But the ongoing war, now entering its second month, is directly impacting the Middle East in more than one way.
On the one hand, the West, led by the US, is trying to pressure Gulf members of Opec+ to increase oil outputs.
But on the other hand, several countries in the region are at risk of having food shortages.
“The Middle East is one of the most vulnerable (regions) in the world due to its dependence on commodities,” a senior IMF official said.
Speaking on background to a group of reporters in Washington, the official said the region was “known for the high level of consumption.”
Lebanon, for example, only had enough wheat supply “for a month or a month and a half,” the country’s economy minister said at the start of the month. And the minister, Amin Salam, warned of “greater consumption” of oils, sugar and other imports during the upcoming month of Ramadan.
Numerous other countries in the Mena region depend on Ukraine and Russia for wheat.
Egypt’s government has said it would need to increase subsidies on items such as bread.
While the IMF official said oil-exporting countries were doing “very well,” he mentioned inflation as a factor that would not spare any country in the region.
“These are all second-round (inflation) effects of the problems at hand,” the official said, referring to the war in Ukraine.
‘No shortage in oil supply’
Following the US decision to ban Russian oil imports and much of Europe following suit, Moscow continues to see its oil pumped into Europe and even the US via third countries.
However, the decision has had ramifications, with domestic oil prices skyrocketing.
According to the senior IMF official, increasing output from oil-producing countries is not the issue. “There has not been a supply shock for the prices to increase in the way they have; this is a geopolitical issue.”
The official was quick to note that there is a need for the public to differentiate between oil and gas. The repercussions of Russian oil bans are not as harmful as the decision to prevent any gas from Moscow.
There are several reasons for this, but mainly that it takes years to set up the infrastructure to transport natural gas. This also includes the need for LNG tankers and other technical procedures vital for transporting and importing gas.