Saudi Arabia’s Finance Minister, Mohammed Aljadaan, issued a stark warning from the IMF’s spring meetings in Washington, stating that global markets are underestimating the severe economic impact of the ongoing regional conflict and the protracted timeline for recovery, even if a ceasefire holds.
Quick Facts
- Full recovery could take “weeks if not months.”
- Physical oil barrels cost $120-$160, not the $90 on screen.
- IMF downgraded Saudi Arabia’s 2026 growth forecast to 3.1%.
A Tale of Two Oil Markets
Aljadaan highlighted a massive gap between financial markets and physical reality. While crude oil futures like Brent might show a price of around $90 a barrel, acquiring actual supply is a different story.
“Good luck if you get an oil barrel for $90,” he stated. “It’s $120, $130, $140, $150, $160 from the last few weeks.”
This sentiment was echoed by an analyst at EBC Financial Group, who described “two oil markets” telling “completely different stories.” The futures market appears to be pricing in a brief disruption, while the physical market signals a significant supply crisis.
Logistical Hurdles Beyond a Ceasefire
Even with the announcement of a 10-day ceasefire between Israeli and Lebanese officials, Aljadaan cautioned against premature optimism. He explained that restoring the flow of energy, fertilisers, and other industrial inputs from the Gulf would not be immediate.
Ramping up production and, more importantly, convincing shippers and insurers that the Strait of Hormuz is safe from attacks will take “some time,” Aljadaan noted.
“And the basic logistics of scheduling tankers and bringing them back after the chaos that we have seen over the last couple of months, that will take possibly to the end of June,” he projected.
Kristalina Georgieva, the IMF’s managing director, supported this view, urging global authorities to recognize the gravity of the situation. “We have a slow-moving solution in the 21st century where we got accustomed to everything moving fast,” she remarked.
For any resolution to be effective, Aljadaan stressed it must be “credible enough” to prevent a recurrence of hostilities. His advice to global counterparts was direct: “Please prepare yourselves, your economies and your people that this will take longer than you expect.”
Saudi Resilience Amid Regional Turmoil
Despite the grim short-term outlook, Aljadaan affirmed that Saudi Arabia and other Gulf states are maintaining business as usual and will not let the conflict derail their long-term structural reforms and economic diversification plans.
This resilience was praised by international bodies. The International Energy Agency’s executive director, Fatih Birol, commended the kingdom for its rapid pivot to its East-West pipeline to maintain oil exports after the Hormuz closure.
Georgieva also pointed to Saudi Arabia and its neighbors as countries that have “done a lot” in recent years to build “strong fundamentals, promote reforms and diversify their economies,” which is making it easier for them to navigate the current crisis.
About the Saudi Ministry of Finance
The Ministry of Finance of Saudi Arabia is the primary government body responsible for managing the Kingdom’s financial and economic policies. It oversees the national budget, public debt, and government investments, playing a central role in driving the country’s economic strategy and Vision 2030 initiatives.
Source: AGBI
