Arab Economies Incurred $1.2 Trillion Losses Due to Coronavirus

 Shoppers are seen in an aisle with subsidized vegetable oils at a government outlet in Cairo, Egypt August 29, 2017. REUTERS/Mohamed Abd El Ghany
Shoppers are seen in an aisle with subsidized vegetable oils at a government outlet in Cairo, Egypt August 29, 2017. REUTERS/Mohamed Abd El Ghany
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Arab Economies Incurred $1.2 Trillion Losses Due to Coronavirus

 Shoppers are seen in an aisle with subsidized vegetable oils at a government outlet in Cairo, Egypt August 29, 2017. REUTERS/Mohamed Abd El Ghany
Shoppers are seen in an aisle with subsidized vegetable oils at a government outlet in Cairo, Egypt August 29, 2017. REUTERS/Mohamed Abd El Ghany

The novel coronavirus pandemic had a harsh economic impact on the Arab economy, with total losses so far amounting to about $1.2 trillion, amid expectations that some 7.1 million workers will lose their jobs.

Those numbers were emphasized in a report issued by the Arab League, which called for the establishment of a crisis fund that could alleviate the repercussions of the force majeure.

The report, which was prepared by the League’s economic affairs department, shed light on the short and long term repercussions of the virus and their impact on the sectors of health, agriculture, food and development

The report detailed the losses as follows: $420 billion in market capital, $63 billion in the GDP of member countries, additional debts of $220 billion, and a daily loss of $550 million in oil revenues, in addition to a decline in exports of $28 billion, more than $2 billion in tariff revenues and loss of about 7.1 million jobs in 2020

The report said that, according to a preliminary evaluation conducted by the International Labor Organization (ILO), the COVID-19 pandemic will have a major impact on labor markets around the world with the soaring unemployment rate.

It added that the health care and food security sectors would be affected the most by the crisis, as well as the industries of oil, tourism and air transport.

The report examined the short-term repercussions in the Arab world, stating: “Although the situation in the Arab countries is much better compared to the United States, the European Union and China, most countries resorted to precautionary measures to contain the virus… leading to huge losses in the aviation and tourism sectors and the loss of about one million employments and hundreds of thousands of seasonal jobs, in addition to the sharp decline in oil prices.”

The report presented a number of proposals, including the establishment of an Arab fund for crises and reviewing the requirements for providing financial support to member-states, by setting more flexible temporary conditions, and postponing outstanding installments during this exceptional period.



Oil Prices Rise as Israel-Iran Conflict Enters Seventh Day

FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
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Oil Prices Rise as Israel-Iran Conflict Enters Seventh Day

FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo

Oil prices rose on Thursday after Israel and Iran continued to exchange missile attacks overnight and US President Donald Trump's stance on the conflict kept investors on edge.

Brent crude futures rose 36 cents, or 0.5%, to $77.06 a barrel by 0913 GMT. US West Texas Intermediate crude for July was up 54 cents, or 0.7%, at $75.68. Brent had surged to its highest in nearly five months at $78.50 on June 13, when Israel began its attacks. The conflict entered its seventh day on Thursday after Israel struck a key Iranian nuclear site and Iranian missiles hit an Israeli hospital, Reuters said.

There is still a "healthy risk premium baked into the price as traders wait to see whether the next stage of the Israel-Iran conflict is a US strike or peace talks", said Tony Sycamore, analyst at trading platform IG.

Goldman Sachs said on Wednesday that a geopolitical risk premium of about $10 a barrel is justified, given lower Iranian supply and risk of wider disruption that could push Brent crude above $90.

President Trump told reporters on Wednesday that he had yet to decide whether the US will join Israel in its attacks on Iran.

As a result of the unpredictability that has long characterized Trump's foreign policy, "markets remain jittery, awaiting firmer signals that could influence global oil supply and regional stability" said Priyanka Sachdeva, analyst at Phillip Nova.

The risk of major energy disruption will rise if Iran feels existentially threatened, and US entry into the conflict could trigger direct attacks on tankers and energy infrastructure, said RBC Capital analyst Helima Croft.

Iran is the third-largest producer among members of the Organization of the Petroleum Exporting Countries, extracting about 3.3 million barrels per day (bpd) of crude oil.

About 18 million to 21 million bpd of oil and oil products move through the Strait of Hormuz along Iran's southern coast and there is widespread concern the fighting could disrupt trade flows.

Separately, the US Federal Reserve kept interest rates steady on Wednesday but penciled in two cuts by the end of the year. Lower interest rates could stimulate the economy, helping to support demand for oil. On the supply side, US crude stockpiles fell sharply last week, registering the largest decline in a year, the Energy Information Administration said on Wednesday.