The Effect of Rising Oil Prices, COVID Vaccine Positive News On MENA Economies

The Effect of Rising Oil Prices, COVID Vaccine Positive News On MENA Economies

The positive news on Covid-19 vaccines in recent days has helped to lift the near-term outlook for the Mena region, including oil-exporting GCC countries, as oil prices continue to move upward, economists and energy analysts say.

“For Gulf countries, oil prices have picked up with Brent reaching its highest level since March and we think the rebound has further to run. This will boost oil exports, narrow current account deficits and should alleviate any lingering concerns that dollar pegs will be abandoned,” said William Jackson, chief emerging markets economist at Capital Economics.

 

“The growing likelihood of a resumption of international tourism next year will come as a huge relief for the likes of Dubai as well as North African economies,” he added. He noted that virus outbreaks in the Gulf have generally become less intense over the past month with the number of tests per confirmed case trending upwards across most countries.

Brent crude was just shy of the $50 per barrel mark as it closed on Friday; West Texas Intermediate also rose. Both benchmarks rose for the fifth straight week.

James Swanston, economist for the Mena region at Capital Economics, expects oil to hit $60 per barrel by the end of this month