Oil prices, inflation likely to rise if Iran crisis worsens
An escalation in the ongoing Iran crisis will hit the region’s economies and boost oil prices, according to Darwish Bin Esmail Bin Ali Al Beloushi, Oman’s Minister of Finance Affairs.
“The Iranian situation, if escalated, would adversely affect a lot of things, including inflation, oil prices, the flow of trade and the flow of investment,” said the Omani minister.
“If the environment is unstable lot of things will be affected,” Al Beloushi said on the sidelines of the launch of a national fund jointly set up by the Social Affairs Ministry and BankMuscat. Under the initiative, the funds will be used to renovate and upkeep houses for poor Omani families in rural parts of the country.
Talking further about the Iran situation, he said that he was not in a position to say how much oil prices would rise in case the Iran issue worsens. “I can’t say how much oil would rise but of course we all know oil is a very sensitive commodity at the moment. It is affected not only by demand and supply, but all sorts of political as well as geopolitical tensions and developments affect oil prices,” he said.
“So, yes if anything becomes worse, as far as Iran is concerned, it is definitely going to affect prices,” he said. He agreed that if oil prices go up it could lead to a spike in inflation. “Internally we are watching inflation. So far it is not a big concern. It is still within the target of below four per cent,” he said. He said that the government is closely monitoring inflation and the objective is not to allow it to go beyond a controllable level. “That is our priority at this point of time. The government will take all necessary measures to make commodities available in the country,” he said.
Al Beloushi agreed that the Arab Spring had an impact on Foreign Direct Investment (FDI). “The effect on FDI has been seen the world over, and we are part of that. We think in Oman our policies are conducive for investment,” he said. He also pointed out that Oman has political stability, transparency, a legal framework and security as well as good returns. He conceded that there was a threat to FDI, adding, “There are opportunities, at the same time there’s competition, there are other countries trying to bring in FDI.” He believes that there is no room to relax. “We should not relax, we have to work hard, we have to promote and market our country, I am optimistic we will see improvement in FDI soon,” he said. I can’t say how much oil would rise, but of course we all know oil is a very sensitive commodity at the moment.”
Darwish Bin Esmail Bin Ali Al Beloushi, Oman’s Minister of Finance Affairs