The Middle East and North Africa are major oil supplies to the world markets. To what extent may the current changes in the region challenge and threaten the well-being of the world economy in general and Europe in particular?
The Middle- East and North Africa (MENA) oil-producing countries provide about 20 per cent (14,000,000 b/d) of world oil production (70,000,000 b/d). So far, these numbers have remained fairly unchanged, despite the ongoing turmoil in the region. The total loss of the Libyan share (2%), has been compensated for by an increase in production by Saudi Arabia.
It was also feared that the uprisings in MENA states would hike energy prices to a damaging level – halting recovery, reigniting inflation and undermining consumer confidence. The world economy was just starting to recover from a three-year downturn sparked by the grave subprime crisis in the United States, which spread in various forms to other regions, Europe in particular. However, according to The Economist (March, 3 2011), both the rise in energy prices and the likely damage appear to be modest, at least thus far. Many forecasters had expected an increase this year anyway. The IMF, which projected global economic growth at 4.4%, now foresees growth of about 4.2%, the difference representing the impact on the world economy of a 10% increase in the price of crude. Saudi Arabia stands ready to pump up as much crude into the market as necessary to keep energy prices in check.
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