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WTO: Global Trade Could Climb 3% in 2025 if MidEast Conflicts Contained

FILE - Containers are piled up in the harbor in Hamburg, Germany, Wednesday, Oct. 26, 2022. (AP Photo/Michael Probst, file)
FILE - Containers are piled up in the harbor in Hamburg, Germany, Wednesday, Oct. 26, 2022. (AP Photo/Michael Probst, file)
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WTO: Global Trade Could Climb 3% in 2025 if MidEast Conflicts Contained

FILE - Containers are piled up in the harbor in Hamburg, Germany, Wednesday, Oct. 26, 2022. (AP Photo/Michael Probst, file)
FILE - Containers are piled up in the harbor in Hamburg, Germany, Wednesday, Oct. 26, 2022. (AP Photo/Michael Probst, file)

The World Trade Organization on Thursday nudged up its forecast for global trade volumes this year and said a further pick up to 3% growth was likely in 2025, assuming Middle East conflicts are kept in check.
Global trade recovered this year from a 2023 slump driven by high inflation and rising interest rates, the WTO report said. In April, the global trade watchdog forecast a 2.6% increase in volumes, which it revised up on Thursday to 2.7%, Reuters reported.
"We are expecting a gradual recovery in global trade for 2024, but we remain vigilant of potential setbacks, particularly the potential escalation of regional conflicts like those in the Middle East," said WTO Director-General Ngozi Okonjo-Iweala in a statement.
"The impact could be most severe for the countries directly involved, but they may also indirectly affect global energy costs and shipping routes."
Israel's blitz against Lebanon's Hezbollah in recent weeks, following a year-long war against Hamas in Gaza, has stoked fears of an inexorable slide towards a pan-Middle Eastern war.
The WTO also cited diverging monetary policies among major economies as another downside risk for the forecasts. This "could lead to financial volatility and shifts in capital flows as central banks bring down interest rates," the report said, adding that this would make debt servicing more challenging for poorer countries.
"There is also some limited upside potential to the forecast if interest rate cuts in advanced economies stimulate stronger than expected growth without reigniting inflation," the WTO said.

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Will Escalation Stop Israeli Gas Production?

File photo of the Israeli Leviathan field (Reuters)
File photo of the Israeli Leviathan field (Reuters)
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Will Escalation Stop Israeli Gas Production?

File photo of the Israeli Leviathan field (Reuters)
File photo of the Israeli Leviathan field (Reuters)

The American energy giant Chevron, which operates the Leviathan field off the Mediterranean coast of Israel, has decided to suspend work on laying an underwater pipeline, part of its third pipeline project, due to the escalating conflict and fears of potential missile strikes. This follows the earlier closure of the Tamar and Leviathan gas platforms as a “precautionary measure” during the Iranian attack on Israel on Oct. 1.

These developments came as the Israeli newspaper Yedioth Ahronoth reported that the Leviathan field, located 130 kilometers off the coast of Haifa, was the target of a missile barrage fired by Hezbollah on Wednesday morning at Mount Carmel and Haifa. Chevron subsequently activated “special procedures,” stating that it was dealing with an operational incident on the drilling platform.

During last week’s Iranian missile attack, Yedioth Ahronoth noted that NewMed Energy, a partner in the Leviathan and Tamar gas fields (the latter located about 19 kilometers off the Gaza Strip coast), informed the Tel Aviv Stock Exchange of Chevron’s decision to temporarily shut down the Leviathan field for several hours.

“In light of the latest security developments and based on the system’s operational considerations, the operator occasionally halts production from the Leviathan reservoir for certain periods,” NewMed Energy, which holds a 45.3% stake in Leviathan, stated to the stock exchange.

Chevron holds a 39.6% stake in Leviathan, while Ratio Energies owns 15% of the project. Chevron also has a 15% stake in Tamar.

Leviathan’s partners approved a $429 million investment on Aug. 1 to launch the preliminary engineering design phase to increase Leviathan’s gas export capacity from the Mediterranean Sea field to 21 billion cubic meters annually.

NewMed Energy stated that Chevron had informed the partners that plans for laying the underwater pipeline have been postponed until Apr. 2025—initially scheduled to begin in the second half of 2025—due to the deteriorating security situation. The delay is expected to be at least six months, affecting next year’s projected cash flow.

Currently, gas from the platform is transported to the shore and integrated into Israel’s national grid, where it is distributed to Israel, Egypt, and Jordan.

The Leviathan field was discovered in 2010 by NewMed Energy, Chevron (then known as Noble Energy), and Ratio. Natural gas production from Leviathan began on December 31, 2019, and since then, it has become a key source of gas for Israel, Egypt, and Jordan.

The third pipeline project was initiated by the Leviathan partners in July 2023, aimed at boosting Leviathan’s annual production capacity from 12 billion cubic meters to around 21 billion cubic meters. This increase is intended to meet growing local demand and export to neighboring countries and international markets, according to NewMed Energy.

Israel continues to export gas through pipelines from Leviathan and Tamar to Jordan and Egypt. Israeli exports to Egypt rose from 4.9 billion cubic meters in 2022 to 6.3 billion cubic meters in 2023, while sales to Jordan remained steady year-on-year at 2.7 billion cubic meters. In the second quarter of this year, Leviathan’s total gas production reached 2.8 billion cubic meters, with exports to Egypt rising by 12.5% to 1.8 billion cubic meters during the same period, while 0.6 billion cubic meters flowed to Jordan, according to Energy Intelligence.

Goldman Sachs estimates that the potential global market impact of disruptions at Leviathan and Tamar could reduce global liquefied natural gas (LNG) supply by nearly 9 billion cubic meters annually, or 1.7% of global LNG supplies, according to a report by Energy Intelligence.