Climate crisis stokes growing challenges amid Middle East economic diversification drives

June 2024 Al-Monitor Trend Report 

2,332 words

As the calendar turned to June 2024, the story of the month for economies in the conflict-rocked Middle East and North Africa (MENA) region appeared to be trending back towards familiar territory: Oil and Saudi Arabia. That began with OPEC+ revealing a complex deal extending oil production cuts into 2025 after key oil ministers convened in Riyadh on June 2, the same day that Saudi Aramco kicked off a massive $11.2 billion share sale that generated needed funds for the kingdom’s ambitious economic diversification projects. 

Yet, weeks later Aramco’s mega-offering has receded into memory and new headlines have coalesced around a topic that won’t fade away for MENA economies: that would be the mounting impact (and costs) of the climate crisis. Consider Egypt, where daily power cuts reached three hours a day in June amid scorching heat as the Arab world’s most populous country faces a new energy crisis, while even much wealthier Kuwait this month also announced power cuts as it struggles to meet increased demand spurred by hot weather.  

Extreme heat also delivered tragedy in Saudi Arabia, where over 1,000 deaths were reported among Hajj pilgrims this month — laying bare the perils of climate threats in the kingdom at a moment when Riyadh is investing billions to attract more visitors. Meanwhile, on June 24, Dubai approved an $8 billion project aimed at developing its rainwater drainage network after a historic downpour and widespread flooding paralyzed the emirate in April.

Such topics will only loom larger going forward, but June also delivered examples of other trends shaping MENA’s economic future as regional power players seek to solidify relevance in a fast-changing world. Case in point: news surfaced on June 23 that Nvidia signed a deal to deploy its AI technology in data centers owned by Qatari telecoms group Ooredoo. That marked the US chip giant’s first large-scale Mideast foray and emerges after the Biden administration recently moved to halt export of some advanced AI chips to the region amid increasing security concerns around China.