Depleting oil reserves heighten risks of a downturn if the ceasefire collapses.
Economic Expert Warns of Oil Reserve Depletion Risks
Pierre-Olivier Gourinchas, the chief economist at the International Monetary Fund (IMF), has issued a stark warning regarding the depletion of strategic oil reserves. He stated that extensive withdrawals from these reserves have helped prevent sharp increases in oil prices during the ongoing conflict in the Middle East. However, the significant reduction in these reserves now limits countries’ ability to respond to potential supply disruptions, especially if the fragile ceasefire between the United States and Iran falters.
Analysis of Oil Reserve Impact
In a recent interview with Reuters, Gourinchas explained that rapid withdrawals from reserves, along with adjustments in refinery production, have effectively curbed price hikes. Only 3% of global oil has been withdrawn from the market, a stark contrast to initial forecasts predicting a withdrawal of 10% to 15%. This sharp decline in reserves poses a serious threat should any new escalation occur.
Risks of Ceasefire Collapse
Gourinchas noted that the IMF may revise its baseline forecasts in its upcoming report on July 8. The organization had to abandon its predictions for 2025 and 2026 due to insufficient historical precedents and heightened geopolitical uncertainty. In April, the IMF presented three alternative scenarios, including a pessimistic outlook that anticipates global growth at 2.5% in 2026, compared to 3.1% in the more optimistic reference scenario.
Shifts in Global Trade
Additionally, Gourinchas warned that a collapse of the ceasefire could heighten risks, particularly following accusations by former President Donald Trump against Iran for an attack on a ship near Oman. He expressed concern that this incident could violate the preliminary agreement aimed at ending the conflict. Furthermore, he highlighted significant shifts in global trade patterns after the tariffs imposed by Trump. The European Union has recently signed trade agreements with Latin America and India after decades of stagnation.
Gourinchas emphasized that the effectiveness of tariffs and economic sanctions is often limited. Economies quickly find ways to circumvent these measures or develop alternative relationships, rendering such tools ineffective in the medium to long term.
For more information, visit Yemen TV.
To follow the news in Arabic
