Editor's note: Freddie Reidy is a freelance writer based in London. He studied history and history of art at the University of Kent, Canterbury, specializing in Russian history and international politics. The article reflects the author's opinions and not necessarily the views of CGTN.

Alongside the human toll of the coronavirus pandemic, there is a huge economic impact. This has been witnessed across the globe but is currently being felt keenly by less diversified economies, in particular, the oil-producing nations of the Middle East. What are the consequences for the region's economies, and are they purely economic?

The oil-producing Middle Eastern states are split between politically stable states with strong oil-producing economies, such as the UAE, Saudi Arabia and Kuwait, and those who are politically unstable or isolated, such as Iran, Iraq and Syria.

All these countries are seeing a dramatic drop in their economic prospects as a direct result of tanking oil prices. The price per barrel last week dropped to an 18-year low of 25 U.S. dollars a barrel. The drop in demand has also been exacerbated by a price war between Saudi Arabia and Russia. Both nations have yet to agree on a reduction of production to stabilize prices, although President Trump did signal that progress was being made, leading to a 40 percent rise in price.

Moscow, quick to continue to sew the seeds of discord, insinuated that Saudi Arabia had been boosting production to weaken the U.S. shale gas industry, which requires a higher barrel price to remain profitable. However, Saudi foreign minister, Prince Faisal bin Farhan was quick to deny the accusation as "fully devoid of truth."

Anemic demand has led to region-wide economic forecast revision. Saudi Arabia has reduced its growth down to 0.7 percent from 2 percent, Kuwait down to 0.8 percent and UAE to 0.6 percent. Saudi Arabia has also announced budgetary cuts, the first G20 nation to do so, in the order of 13 billion U.S. dollars.

Currently, there is a collective hope that once the COVID-19 crisis has passed, the global economy will recover relatively quickly. However, due to a high production rate and surplus oil reserves, a rapid cash injection is unlikely. Oil analysis firm Oilx estimates that there are currently over 80 million barrels of oil being stored at sea, with land-based storage also filled to capacity.

In the U.S., the Department for Energy is considering renting Federal facilities to domestic producers to maintain production. There is also sustained pressure on the White House to ban the import of foreign oil and impose tariffs to stabilize the price.

Similar moves are also being considered across the border in Canada, where in Alberta province, Premier Jason Kenney was particularly bullish saying,  "We're not going to surrender our industry, and we're prepared to go the distance here." This sentiment was echoed by President Trump, who stated that tariffs "are one tool in the box" and that he would "do whatever I have to do" in dealing with the situation.

There is, though, a much longer-term threat to the Middle East economy, which is that the current dispute hastens the speed at which the U.S. is keen to move further toward domestic production. Tariffs would also extend to Middle East operations in the U.S., such as Motiva, the Saudi-owned Texas refinery.

In the short-term, based on a stabilized barrel price of 40 U.S. dollars, the Institute of International Finances estimates that the current COVID-19 crisis will cost the Middle East and North Africa region 192 billion U.S. dollars.

Oil does represent the main industry of the region. However, other industries have also been heavily hit. In Saudi Arabia, the fledgling retail sector, which employs 500,000, is all but closed during the crisis. Tourism has also been decimated across the Middle East with governments announcing huge bailouts for their respective flag carrier airlines, airlines which would also usually be key customers for domestic oil.   

In Saudi Arabia, the government is likely to be forced to cancel the Haj pilgrimage in July. The pilgrimage is the second-largest revenue stream for the country behind oil and represents a further blow. In Iran, the loss of religious tourism and oil revenue is set to send the heavily sanctioned economy into free fall and could risk a major schism in the longstanding regime.

Presently, the Middle East has to overcome and adapt to external changes in the market, but the direct impact of the pandemic is soon likely to be felt. Iran was hit heavily early on, but the pandemic is set to reach the region soon.  

The World Health Organization has warned that the window for containment in the Middle East is closing rapidly, and nations need to rapidly prepare. Wealthier nations will be able to weather the storm more readily, but the fragile economies of Iran and Afghanistan are seriously at risk.

In war zones such as Yemen, the situation looks grave, with over three-quarters of the country requiring humanitarian assistance and the absence of a single doctor in 18 percent of the country's districts. Thankfully, the threat of the coronavirus appears to have galvanized the ceasefire in northern Syria, with the Syrian Observatory for Human Rights reporting its lowest death toll since hostilities began.

The need for coordinated action in the Middle East cannot be overstated and is the key to social and economic safety and security. The region can ill afford nations such as Iran and Yemen developing into hotbeds of infection if the crisis is to be overcome rapidly.

At a time of crisis, it is essential that diplomatic relations are strong and the economy is allowed to bounce back rapidly. A diplomatic spat encouraging economic protectionism and a surplus of oil poses an unnecessary long-term risk to a short-term crisis.

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