Strikes on Saudi infrastructure by the Yemeni Houthis could affect the global economy, the managing director of the International Monetary Fund has warned.
Speaking at a joint event with the World Bank in Thailand, Kristalina Georgieva said that despite this danger, Saudi Arabia remains resilient and has a better economic outlook than most of its neighbors thanks to its diversification efforts in recent years as it aimed to reduce the share of oil revenues in its budget. Still, the situation remains difficult, with a high risk of further rises in energy prices and a potential slowdown in the artificial intelligence race.
“The near closure of Hormuz and now disruptions in the Red Sea have sharply curtailed oil and gas exports; damage to energy facilities has reduced production capacity; and non-hydrocarbon activity has been constrained by reduced trade, weaker business confidence, and rising prices of essential goods,” Georgieva said, as quoted by the Saudi Gazette.
The Yemeni Houthis, meanwhile, vowed more attacks on Saudi targets, after hitting Aramco’s headquarters, facilities in Dhahran, a refinery in Riyadh, and Riyadh’s airport over the past week. The conflict is expanding as a Saudi-led force is fighting the Houthis to regain control of most of Yemen’s coast that lies on the Red Sea and the critical Bab el-Mandeb Strait, through which Saudi Arabia’s oil exports from the Yanbu port to Asia typically pass.
The Red Sea hostilities prompted Saudi Arabia to redirect its oil exports back to the Persian Gulf, where it is using ship-to-ship transfers to get the oil through the Strait of Hormuz and load it onto supertankers in the Gulf of Oman. Iran, however, is also stepping up its attacks in the Gulf. On Wednesday alone, two vessels sank in Hormuz, one of them a container vessel that was struck while traversing the waterway, and the other a dry bulk carrier that was struck in late September.
By Irina Slav for Oilprice.com
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