Gulf markets have opened down this morning, weighed down by lower oil prices following a bearish assessment of the global economic landscape by the IMF.
Brent crude fell by more than 0.4 per cent, dropping 52 cents to $126.24 a barrel as Christine Lagarde, managing director of the International Monetary Fund (IMF), warned “the world economy is still not out of the danger zone” and that high oil prices were adding to problems.
This morning the Dubai Financial Market (DFM) was down 1.6 per cent to 1,649.15. The Abu Dhabi Securities Market General Index fell 0.12 per cent to 2,568.48.
Trading in shares had made a big comeback in Dubai with the DFM recording strong volumes yesterday, with the emirate's bull market continuing into its seventh week. Traded values reached Dh713 million (US$194.1m), a two-year high for the exchange.
Ms Legarde made the comments in a statement at the closing of the meeting of the Group of 20 finance ministers and central bank governors in Mexico City yesterday.
“G-20 countries must now strengthen resilience to further shocks that could result from still fragile financial systems, high public and private debt, and higher world oil prices,” Ms Legarde said.
The price of Brent had been steadily climbing on supply fears as several European countries banned imports from Iran, and on renewed optimism the global economy was on the mend.
Oil prices are still $20 a barrel below their 2008 record of $147. However according to Reuters, its latest monthly survey out later today will show oil analysts raising their predictions for Brent crude by $3 since the previous month.
Israeli military action against Iran, OPEC's second biggest producer, over its nuclear programme, which Israel has not ruled out, would undoubtedly send prices even higher.
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