This picture taken December 12, 2019 shows a man monitoring the board at the Stock Exchange Market (Tadawul) bourse in Riyadh. - Energy giant Saudi Aramco's market value soared above $2 trillion as its share price surged again on its second day of trading. The valuation milestone was sought by Saudi Crown Prince Mohammed bin Salman when he first floated the idea of selling up to five percent of Aramco, the world's largest oil firm, about four years ago. Aramco shares jumped another 9.7 percent to 38.60 riya

Mideast passes stress test as Iran-Israel trade blows, but economic challenges remain

April 2024 Al-Monitor Trend Report 

2,404 words

Months of scorching hot Mideast tensions sparked by the Gaza war finally boiled over into open attacks between Israel and Iran in April, giving shape to a long-feared eruption of a regional war that — alongside adding to the human toll — could deliver another jolt of economic pain locally and globally.

That saw the foes trade direct blows after Israel’s provocative April 1 strike on Iran’s embassy complex in Syria, which quickly put global markets and investors on edge as the conflict threatened to spiral out of control into all-out war. Oil prices rose towards $100 per barrel in early April, reaching six-month highs, while adding a new dimension to threats facing the Middle East’s fragile economic stability after months of turbulence. That said, April’s escalations demonstrated that global markets appear to be learning to live with this new era of Mideast conflict.

That crystallized after Iran’s unprecedented retaliatory attack on April 13, when it launched hundreds of mostly intercepted missiles and drones at Israel, followed by Israel striking Iran on April 19. Tel Aviv’s response was seen as modest, while Iran’s mild reaction also signaled de-escalation was underway (at least for now). After some jitters, global markets have moved on, and oil has since retreated back below $90 as of April 30. That comes alongside signs of business as usual in the Middle East, from Riyadh hosting over 1,000 leaders at the World Economic Forum meeting between April 28–29, to Algeria signing a $3.5 billion deal with a Qatari firm to develop the world's largest dairy farm.

Ultimately, after months of unrelenting turmoil, April delivered a key stress test for Middle East stability, but the potential for ongoing economic pain remains. In April, the International Monetary Fund (IMF) revised the region’s growth outlook downwards for the second time in 2024 amid geopolitical tensions. Pointing to Red Sea attacks and oil cuts, which have added to existing vulnerabilities related to high debt levels and elevated borrowing costs, the IMF projects growth to remain subdued, improving moderately to 2.7% in 2024, from 1.9% last year. That came after the IMF in January had forecasted 2.9% growth, down 0.5 percentage from October projections. 

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