IMF warns attacks on Saudi Arabia could hurt global economy

The International Monetary Fund (IMF) warned on Wednesday that attacks on Saudi Arabia could hurt economies worldwide. This warning follows a strike that damaged oil giant Aramco's headquarters.

Impact of Aramco Strike

Saudi Arabia's energy ministry stated that an administrative building at Aramco's headquarters in Dhahran was hit on Tuesday evening. The ministry said the attack caused a limited fire and there were no deaths or injuries. Yemen's Iran-aligned Houthis claimed responsibility for the strike.

IMF managing director Kristalina Georgieva highlighted Saudi Arabia's economic importance. "In that sense, these developments have potentially negative spillovers for everybody, everywhere," she said at the IMF and World Bank annual meetings in Bangkok.

According to a person with direct knowledge, the building's top three floors, including chief executive Amin Nasser's office, were badly damaged. Two sources reported that operations at the complex were continuing as normal, although some employees had been told to work from home. Another source said some work had moved to offices abroad. Aramco oversees its oil rigs, refineries, export terminals and pipelines from a centre at its headquarters.

Economic Forecasts and Market Reaction

Oil prices rose on Wednesday, with Brent crude trading above $106 a barrel. Aramco's shares fell 0.5% in early trading. Air travel has also been disrupted, with Lufthansa suspending flights to Riyadh up to and including 18 November.

The IMF expects Saudi Arabia's economy to shrink by 3.3% this year, before growing by 7.9% in 2027. The fund published these forecasts on Tuesday, but had prepared them before Saturday's deadly attack on Riyadh airport. The recovery forecast assumes the Strait of Hormuz will gradually reopen from March 2027, with shipping returning to pre-war conditions by October.

Saudi Arabia's East-West pipeline carries oil to Yanbu on the Red Sea, allowing exports to avoid the Strait of Hormuz. The IMF said this had reduced the economic damage compared with some neighbouring countries.

Regional Economic Outlook

The IMF's latest World Economic Outlook revised Iran's forecast downward to a 7.6% contraction in 2026. This is a worse outlook than for its main Middle Eastern rivals amid the war. The IMF expects the economies of the Middle East and Central Asia to contract by 0.3% this year.

Several countries in the region face deeper contractions than Iran, with the IMF forecasting declines of 16.7% in Kuwait, 16% in Iraq, 15.6% in Qatar and 11.3% in Bahrain. Saudi Arabia and the United Arab Emirates are expected to see smaller contractions of 3.3% and 3.9%, respectively. Others are projected to grow, including Egypt by 5.1%, Israel by 4.5%, Oman by 4.1%, and Jordan and Turkey by 2.7% each.

Why it matters

The IMF's warning underscores the global economic risks associated with instability in Saudi Arabia, a key player in the global energy market. The potential for negative spillovers highlights the interconnectedness of global economies and the importance of stability in major oil-producing regions.

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Sources

• ca.finance.yahoo.com: IMF warns attacks on Saudi Arabia could hurt global economy after strike on Aramco headquarters
• iranintl.com: Iran faces worse economic outlook than war-hit Mideast rivals, IMF says | Iran International

This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.