Plunging oil prices have inflicted a massive shock on the economies of Middle East producers. What these countries have to understand is that, unlike past price declines, this one will not be transitory – and thus represents a perfect moment to launch comprehensive economic reforms.
BEIRUT – In June 2014, a barrel of Brent crude – the main benchmark of the international oil market – sold for $115. Today, less than two years later, the price is $45 – or even less. Not surprisingly, that collapse has been a massive shock to Saudi Arabia and the Gulf oil sheikhdoms, which rely on oil for some 85% of their revenues. And what they need to realize is that, unlike past price declines, this one will not be transitory.
BEIRUT – In June 2014, a barrel of Brent crude – the main benchmark of the international oil market – sold for $115. Today, less than two years later, the price is $45 – or even less. Not surprisingly, that collapse has been a massive shock to Saudi Arabia and the Gulf oil sheikhdoms, which rely on oil for some 85% of their revenues. And what they need to realize is that, unlike past price declines, this one will not be transitory.