World Bank to Asharq Al-Awsat: Saudi Arabia Plays a Central Role in Stabilizing Energy Markets

A cargo ship in the Gulf, near the Strait of Hormuz, March 11, 2026. REUTERS/Stringer/File Photo
A cargo ship in the Gulf, near the Strait of Hormuz, March 11, 2026. REUTERS/Stringer/File Photo
TT

World Bank to Asharq Al-Awsat: Saudi Arabia Plays a Central Role in Stabilizing Energy Markets

A cargo ship in the Gulf, near the Strait of Hormuz, March 11, 2026. REUTERS/Stringer/File Photo
A cargo ship in the Gulf, near the Strait of Hormuz, March 11, 2026. REUTERS/Stringer/File Photo

At a time when geopolitical tensions are disrupting the stability of vital maritime corridors, fundamental questions are emerging about the ability of major economic ambitions in the Gulf to withstand the test of the Strait of Hormuz, which is an indispensable “lifeline” for the global economy, said Roberta Gatti, Chief Economist for the Middle East, North Africa, Afghanistan, and Pakistan at the World Bank.  

In remarks to Asharq Al-Awsat, Gatti warned that current geopolitical tensions place the region’s economic diversification ambitions under a real test, while stressing, on the other hand, the central role Saudi Arabia plays in global energy markets through measures aimed at enhancing the reliability of supply chains.  

The Kingdom’s efforts extend not only to exporters, but also to inflation, trade, and global growth, she added. 

Last week, the World Bank issued a report ahead of the Spring Meetings of the World Bank and the International Monetary Fund, in which it maintained Saudi Arabia at the forefront, with projected growth of 3.1 percent in 2026, highlighting it as the Gulf economy most capable of coping with the repercussions of the current geopolitical crisis, despite sharp revisions affecting regional estimates.  

Data in the report also showed that the fiscal deficit is expected to narrow by half to 3 percent, from 6 percent in 2025, alongside a shift in the current account balance from a deficit of -2.7 percent to a surplus of 3.3 percent.  

Roberta Gatti, Chief Economist for the Middle East, North Africa, Afghanistan, and Pakistan at the World Bank. (World Bank)

On Monday, the United States imposed a naval blockade on Iranian ports, in an attempt to increase pressure on Iran to reopen Hormuz following the collapse of peace negotiations in Pakistan over the weekend. The negotiations are expected to resume in the coming days. 

Gatti stressed: “Saudi Arabia plays a central role in global energy markets, and its efforts to strengthen resilience are especially important at a time of heightened uncertainty around the Strait of Hormuz.” 

“Measures that enhance the reliability of energy supply chains - whether through infrastructure investment, alternative export routes, spare capacity, or stronger logistical preparedness - can help reduce the risk that such shocks translate into broader global disruption,” she added.  

“These efforts matter not only for reducing volatility in global oil and gas markets for the benefit of the exporters, but also for global inflation, trade, and growth, especially in energy-importing developing countries that are highly vulnerable to volatility of these markets.” 

Economic Diversification Under Stress Test

Gatti said the current conflict has directly highlighted the strategic importance of economic diversification, which is a core objective adopted in national development plans across GCC countries. She pointed out that data recorded since February 28 clearly reflects this divergence, stating: “The current conflict has highlighted the importance of economic diversification, an objective mentioned in multiple National Development Plans of GCC countries.” 

“Since February 28, relatively more diversified economies, such as the UAE and Bahrain, have seen their forecasts downgraded significantly less than those of less diversified economies, such as Qatar and Kuwait. In addition, these larger forecast downgrades for Qatar and Kuwait reflect their higher reliance on route that goes through the Strait of Hormuz for trade and energy exports and the lack of alternative bypass routes.” 

The World Bank expects Qatar’s economy to contract by 5.7 percent, marking a downgrade of 11 percentage points from previous estimates due to damage to liquefied natural gas supplies. Kuwait’s economy is also expected to contract more sharply by 6.4 percent, given its 100 percent reliance on the Strait of Hormuz for oil exports, making any closure of the waterway equivalent to a complete halt of the country’s financial lifeline.

In contrast, the UAE and Oman are expected to grow by 2.4 percent each, while Bahrain is expected to grow by 3.1 percent.

In this context, Gatti said: “The ‘Vision’ strategies remain appropriate and important as they aim to reduce structural dependence on hydrocarbons and promote private sector-led growth, but, as these recent events show, their implementation is sensitive to external shocks and the impacts are likely to be uneven across the region: more diversified economies tend to be more resilient due to stronger fiscal buffers and deeper non-oil sectors.” 

“It also matters greatly into which new sectors the economies are diversifying. For example, prolonged instability could dampen investment and further disrupt tourism, aviation, and logistics sectors which have been expanding rapidly in the region. In contrast, sectors like banking and finance have been more insulated,” she explained. 

The commercial port of Yanbu is one of Saudi Arabia’s current key maritime gateways. (Mawani)

Energy Poverty

Gatti turned to the more severe dimension of energy market volatility, explaining that rising oil prices impose compounded pressures on developing importing countries, as they translate directly into higher electricity costs, more expensive public transportation, and rising food prices linked to increased fertilizer costs.

She noted that these pressures inevitably lead to wider trade deficits and greater strain on public budgets, particularly in poorer countries with limited reserves, which are forced to bear significant fiscal costs if they attempt to subsidize energy prices to ease the burden on citizens.

Gatti further noted that reliable and affordable energy is not merely a service, but a lifeline for both households and firms. In this context, volatility in fuel and gas markets delivers a “double hit” to these economies, as households struggle to meet basic needs while firms face more expensive and less reliable energy, making industrial expansion slower, riskier, and less competitive.

In this sense, sharp short-term price increases may not only have immediate effects, but could also disrupt long-term structural transformation in energy-poor developing economies, she told Asharq Al-Awsat.

“The resilience of economies to withstand oil and gas shocks depends on exposure and vulnerability of their economic structures. Degree of reliance on imported energy matters, and so do reliance on energy-intensive sectors, and how consumers, firms, and government adapt to rising prices,” she remarked.

The 'Cost' of Alternative Energy Routes

Addressing the need to invest in land corridors or pipelines that bypass narrow maritime chokepoints, Gatti said the decision requires a careful balance between economic efficiency and resilience. “Decisions on such investments must balance consideration for economic efficiency and resilience to shocks. The concentration of oil and gas export routes from the Gulf through the Strait of Hormuz suggests that this is likely the most economically efficient option, given geography and other technical and economic considerations. On the other hand, diversifying trade routes brings resilience to shocks.”

For example she highlighted that Saudi Arabia can “divert a portion of their oil exports to the Red Sea port of Yanbu via the East-West pipeline, with 7mbpd capacity. The UAE similarly has Habshan-Fujairah pipeline with 1.5-1.8mbpd capacity to bypass Hormuz.

Conversely, the Kirkuk–Ceyhan pipeline between Iraq and Türkiye can carry only about 0.4 mbpd, well below its 1.5 mbpd intended capacity, because of the delayed repairs needed for the segment within Iraq.”

The End of the 'Efficiency-Only' Era

On supply chain resilience, Gatti said the world is undergoing a severe test that began with the COVID-19 pandemic and has extended to regional conflicts, events that have exposed the fragility of excessive reliance on geographically concentrated production networks.

She stressed that the key lesson from these crises is that “efficiency alone is no longer enough,” as governments and companies increasingly need to build buffers, diversify sources, increase inventories of critical goods, and develop more flexible logistics systems.

She also pointed to the current analytical frameworks and extensive research to support countries in this transition, referring to the World Development Report 2020, which examined the challenges facing developing countries in the era of global value chains.

She also noted an upcoming report titled “Resources to Resilience: Economic Diversification for Oil and Gas Exporters in MENAAP,” which will provide a roadmap for exporters in the Middle East, North Africa, and Asia-Pacific on how to diversify their economic capabilities to navigate disruptions in maritime corridors and sudden shocks.



Silver Demand Seen Down 5% This Year Due to Weaker Jewellery Purchases

Silver bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, January 10, 2025. (Reuters)
Silver bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, January 10, 2025. (Reuters)
TT

Silver Demand Seen Down 5% This Year Due to Weaker Jewellery Purchases

Silver bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, January 10, 2025. (Reuters)
Silver bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, January 10, 2025. (Reuters)

Silver demand is expected to fall by 5% in 2026 due to weaker jewellery demand and lower consumption in solar cells, where high prices have accelerated substitution, research showed on Friday.

Research done by consultancy Metals Focus for the Silver Institute puts demand at 1.08 billion troy ounces this year.

Silver, used in jewellery, electronics, electric vehicles and solar panels as well as for investment, is ‌down 59% ‌to $50 an ounce since retail buying drove prices ‌to ⁠a record high ⁠of $121.6 in January.

The base for that rally was created in 2025, when silver surged 147%, as massive inflows of the metal to US inventories due to tariff uncertainty and into silver-backed exchange-traded products (ETPs) tightened liquidity in the London market.

This year, expectations for higher interest rates, a stronger dollar and higher bond yields have weighed on investment ⁠sentiment.

Silver released through ETP selling, outflows from stocks ‌in the US and a smaller ‌market deficit improved liquidity in the physical market, the Silver Institute and ‌consultancy Metals Focus said on Friday.

Metals Focus sees net ETP ‌outflows of 45 million ounces this year after 278 million ounces of inflows in 2025.

As of early November, ETP holdings stood at 1.25 billion ounces.

Industrial demand is expected to fall by 3% in 2026 as installations ‌in photovoltaics have fallen short of expectations, particularly in China, while January's record silver prices accelerated ⁠substitution.

Meanwhile, demand ⁠for jewellery and silverware is forecast to decline by 22% and 17%, respectively, as higher prices and weaker rural spending in India encouraged purchases of smaller, lighter products.

Demand in China and the US is also subdued. Strong retail investment in late 2025 and early 2026 gave way to far more subdued buying from March as silver prices fell, Metals Focus said.

It expects global bar and coin demand to fall 2% this year, with US retail investment hitting its lowest level since 2010.


Gold Rises on Bargain Hunting but Heads for Weekly Decline

Gold necklaces are on display inside a jewellery showroom on the occasion of Akshaya Tritiya, a major gold buying festival, in Mumbai, India April 18, 2018. (Reuters)
Gold necklaces are on display inside a jewellery showroom on the occasion of Akshaya Tritiya, a major gold buying festival, in Mumbai, India April 18, 2018. (Reuters)
TT

Gold Rises on Bargain Hunting but Heads for Weekly Decline

Gold necklaces are on display inside a jewellery showroom on the occasion of Akshaya Tritiya, a major gold buying festival, in Mumbai, India April 18, 2018. (Reuters)
Gold necklaces are on display inside a jewellery showroom on the occasion of Akshaya Tritiya, a major gold buying festival, in Mumbai, India April 18, 2018. (Reuters)

Gold rose on Friday as bargain hunting emerged after prices hit a more than one-year low in the previous session, while market focus shifted to upcoming US inflation data.

Spot gold climbed 1% to $3,915.31 per ounce by 0322 GMT but was down 3.5% so far this week. US gold futures for December delivery gained 0.9% to $3,919.60.

"Today's move is ‌more of a ‌positioning adjustment, given that several intraday short-term ‌momentum ⁠indicators had kind ⁠of hit an extreme oversold level after yesterday's dramatic fall," said Kelvin Wong, a senior market analyst at OANDA.

"A short-term driver that could be bullish for gold will be a sudden turn of the US Treasury yield, that would potentially slow down the US dollar."

Spot gold prices hit their lowest level since ⁠October 2025 on Thursday as oil prices climbed ‌on fading hopes for peace ‌in the Middle East, spurring fears of higher inflation and elevated interest ‌rates.

Markets see an 89% chance of a 25-basis-point US ‌rate hike in December, while the probability of a larger 50-basis-point move is priced at 11%, according to CME's FedWatch tool.

Although gold is typically seen as an inflation hedge, higher interest rates increase the ‌opportunity cost of holding non-yielding bullion, reducing its appeal to investors.

Federal Reserve Bank of New York ⁠President John ⁠Williams said on Thursday more rate hikes are likely as the US central bank seeks to lower high levels of inflation in an otherwise healthy economy.

Data showed the number of Americans filing new claims for unemployment benefits increased more than expected last week, but remained at a level consistent with a stable labor market.

Market participants now await the US Producer Price Index data due at 1330 GMT.

Among other metals, spot silver rose 1% to $50.49 per ounce and palladium climbed 2.1% to $1,014.50, but both were headed for weekly declines.

Spot platinum gained 1.3% to $1,538.22 and was on track for a modest weekly gain.


Dollar Set for Best Week in Two Months, Yen Tests 160

US dollar banknotes are seen in this illustration taken March 24, 2026. (Reuters)
US dollar banknotes are seen in this illustration taken March 24, 2026. (Reuters)
TT

Dollar Set for Best Week in Two Months, Yen Tests 160

US dollar banknotes are seen in this illustration taken March 24, 2026. (Reuters)
US dollar banknotes are seen in this illustration taken March 24, 2026. (Reuters)

The dollar held near 19-month highs on Friday and was set for its biggest weekly rise in two months as bets on a larger rate hike pushed up US yields and the yen hovered below the 160 mark, prompting Tokyo to warn it would respond to excessive moves.

Treasury yields rose after President Donald Trump's comment that the US did not need a deal with Iran stoked worries about Middle Eastern oil supply, lifting crude prices and, with them, inflation expectations.

The move, together with hawkish comments from Federal Reserve officials and this week's stronger-than-expected ‌US inflation data, has ‌left traders weighing the prospect of a larger-than-usual Fed rate hike ‌next ⁠month.

Two-year Treasury yields ⁠have risen 33 basis points so far this week to around 4.85%, on course for their biggest weekly jump since 2024.

The biggest risk to dollar strength is a Middle East peace deal, said Nick Rees, head of macro research at Monex, as that would diminish the support it draws from high energy prices and its safe-haven status.

"Absent that happening, we think the dollar is likely to continue to at least remain around current levels if not strengthen slightly as we look ahead," Rees said.

The ⁠euro edged up 0.1% to $1.1065, after hitting its lowest level against the ‌dollar since April 2025. For the week, it is ‌down 0.7%, on track for its largest weekly loss since late September.

Fed officials this week warned that US ‌inflation remains stubbornly elevated, with some signalling openness to a 50-basis-point rate increase if price pressures ‌fail to ease. Traders are pricing in a 12.1% chance of such a hike next month, up from 0% last week, the CME FedWatch tool showed.

The dollar index, which measures the greenback against a basket of currencies, was at 103.17, near its highest since April 2025. For the week, the dollar is set ‌to gain 0.9%, the most since September.

YEN INTERVENTION IN FOCUS

The yen was steady at 159.90 per dollar, around its weakest since early September, ⁠fuelling concerns about possible intervention. ⁠The currency has weakened 0.9% this week, on track for its biggest weekly loss since September.

Japanese Finance Minister Satsuki Katayama said on Friday the government would respond appropriately to currency volatility.

Japan spent 15.4 trillion yen ($96.5 billion) to bolster the currency after it sank to a four-decade low of 163.99 per dollar in late July.

Markets will be cautious around this level, said Monex's Rees, adding that he expects the trigger for intervention somewhere a little higher than 160.

The Australian dollar has fallen about 3.4% so far this month, making it the worst-performing G10 currency against the greenback. Australia is the only G10 country for which markets are pricing a rate cut next year. The Aussie was last at $0.6794.

The dollar was little changed against the Swiss franc at 0.836, hovering near a one-month high.

Among cryptocurrencies, bitcoin fell 3.8% to $68,759, dropping below the key $70,000 level to its lowest since August. Ether also dropped 4% to $1,933.49.