Views /Editor-in-Chief

Is it the beginning of the end or end of the beginning? Whatever interpretations and analyses experts might offer on the steep decline in oil prices, there is no doubt that the current crisis is causing alarm about the future of this most important strategic commodity and its impact on the Gulf States in particular.
The American bank Morgan Stanley has set three scenarios. First, they see a bear market where oil prices will continue to decline due to the inability of the market to regain balance. Oil production may remain high or even increase while demand remains subdued.
The second is a base case scenario, where oil prices will be stable. The third scenario is a bull market where prices are expected to increase, but the possibility for this seems remote.
Saudi oil minister has said that OPEC will not cut production even if prices fall to $20 per barrel. Does this mean that there is a Gulf-American conspiracy to damage the economies of Russia and Iran?
Or is it an attempt to  target the Canadian gas and oil or American shale industry and oil extracted from the deep waters in Brazil and North Pole? Or, do they want to increase supply to create a surplus in the international market?
The fact is that Gulf countries, including Saudi Arabia, have been hit hard like other producers as they have lost 50 percent of their oil revenue and exports of petrochemical products too have been affected. Also, stock markets have plunged, while expenses and inflation remain the same. There are fears that Gulf economies might post deficits instead of surplus and they could be forced to draw from their public reserves or take loans to keep their economies robust.
The question is whether Gulf states can resist the pressure if oil prices decline further or if the current situation continues for five years. Will these countries be able to pay salaries, sustain their welfare systems, subsidize commodities, maintain the high spending on education, health, infrastructure and other services? Will these countries wake from their slumber before economic storms engulf them?  Or, are they ready to learn from the successful experiences of Singapore, Malaysia, South Korea and Finland?  
Will we learn from the ‘Dutch disease’ to overcome the negative consequences of oil crash or follow what the Arab poet Ma’ruf Al Rusaf said: “Sleep and do not wake up, the only winner is sleep”.
The Peninsula