IMF Managing Director Kristalina Georgieva, on this day, Thursday, lamented that the ongoing conflict between Israel and the Palestinian resistance, spearheaded by the Izz ad-Din al-Qassam Brigades, the militant faction of the Islamic Resistance Movement (Hamas), “evokes profound sorrow” and portends to further darken the already somber global economic outlook. She expounded, “We are vigilantly observing the evolving situation and its potential repercussions, notably within the realm of oil markets.”
She further explicated, during a press conference held as part of the annual gatherings of the IMF and World Bank in Marrakech, Morocco, that oil prices have exhibited oscillations, and markets have displayed reactivity, yet it remains premature to prognosticate the full extent of the economic ramifications.
She added, “Manifestly, this constitutes a novel overcast within an already lackluster global vista. A novel overcast that compounds the melancholy of this vista, a circumstance we certainly could have foregone.”
The past Saturday, the Palestinian resistance in Gaza, led by the Izz ad-Din al-Qassam Brigades, initiated operation “Al Aqsa Intifada” in retaliation to the persistent aggression against the Palestinian populace, their assets, and holy sites, most notably the Al-Aqsa Mosque. In parallel, Israel launched operation “Iron Blades” and persists in conducting relentless incursions into the Gaza Strip, an area subject to a blockade since 2006.
On Wednesday, US Treasury Secretary Janet Yellen articulated that the Israeli situation has raised additional apprehensions for the US economy.
On Tuesday, World Bank President David Malpass asserted, “The altercation between Israel and Gaza constitutes an avoidable international economic upheaval that will complicate the endeavors of central banks to gracefully abate inflation in various economies if it disseminates.”
Detrimental Spill-On Effects
On Tuesday, the IMF foresaw detrimental spill-on effects on Middle Eastern economies and beyond owing to the conflagration between Israel and the Palestinian resistance in the Gaza Strip.
IMF Research Director Pierre Olivier Gourinchas opined that the war between Israel and the Palestinian resistance would impact economies in the region and beyond, attributable to burgeoning oil prices and political instability.
An IMF report released this day, Thursday, prognosticated that growth in the Middle East and North Africa would recede to 2% in 2023, juxtaposed with 5.6% in the preceding year, attributed to various factors, including diminished oil production, more stringent monetary policies, and challenges in numerous nations.
However, the report, disseminated on the margins of the IMF and World Bank annual conventions in Marrakech, anticipated an amelioration in regional conditions for 2024, poised to reach a 3.4% growth.
Influence of the Conflict on Oil Provisions
In a similar context, the International Energy Agency announced this day, Thursday, that the clashes between Israel and the Palestinian resistance since Saturday in the Gaza Strip “had no direct bearing on oil provisions,” affirming that the potential effect on oil exports remains “presently circumscribed.”
The Agency communicated in its monthly oil market report: “While the immediate repercussions on oil provisions remain currently constrained, these attacks have introduced a heightened risk premium regarding geopolitical perils.”
However, the Agency issued a cautionary note that “even though there have been no recorded direct impacts on actual supplies, markets remain in a state of heightened vigilance as the crisis unfolds,” reiterating its readiness to intervene as necessary to ensure adequate supplies to the markets.
The Agency emphasized, “The conflict in the Middle East is characterized by its opacity and rapid evolution,” and appended that “a severe escalation in geopolitical hazards within the Middle East – a region accounting for over a third of global seaborne oil trade – represents a substantial challenge to the market.”