In the longer run, oil and gas reserves will eventually run out. In fact, revenues from oil are
expected to decline in the face of reductions in global demand starting around 2040, if not sooner.
And the most vulnerable nations are Bahrain and Oman, whose reserves are predicted to exhaust in
ten years for Bahrain and in twenty-five for Oman. Therefore, these nations have long been pushed to
diversify their economies by creating profitable industries outside of oil
and gas due to the anticipated decline in hydrocarbon reserves as well as earnings.
So… Is the middle east
really running out of oil? And are these nations trying to diversify themselves to deal with the
post oil future? Well…
Some analysts think it is only a matter of time, which is strongly reinforced by the fact that the
Middle East is making efforts to diversify its sources of income by forging ahead with
plans to enter the trade industry and bring money home, and stop relying on the fossils.
While another aspect to consider is that switching from oil to a more affordable,
cleaner energy source is inevitable. So, oil will cease to be used as a vehicle
fuel in less than 100 years, if not sooner. But what is the reality?
The discovery of petroleum in the middle of the 20th century transformed a lawless,
extremely underdeveloped area into one of the richest places on the globe.
Qatar, Kuwait and the United Arab Emirates are all richer than most of the Developed European
Nations. Even Saudi Arabia, Bahrain, and Oman are on a par with Japan or the U.K.
And the economic success of nations like Bahrain, Qatar, Kuwait and the United Arab Emirates "hangs
on oil market prospects" and "increasing oil production and higher oil prices,".
Moreover, oil has been a significant source of energy for the world since the 19th century.
Oil meets 33% of global energy demand, however due to global trends toward renewable resources
and technological breakthroughs, oil demand may start to fall sooner than anticipated.
As a matter of fact, the price of Brent crude oil dropped from $64 per barrel in early 2020 to $23
per barrel in April 2020 as a result of the worldwide economic downturn brought on by the
coronavirus epidemic. So…
What will happen to Middle Eastern Economy if nobody purchases oil any longer?
Well… The notion that people will abruptly or gradually
stop buying oil is false or misleading. Oil is a key component of everything we own (not only gas).
So far, the decline has been mostly driven by a sharp drop in oil prices;
the demand has steadily increased, and the oil production has consistently increased faster.
In fact, the Saudi Arabian oil is in demand because of the conflict in Ukraine.
The International Monetary Fund estimates that the current boom will bring Middle
Eastern energy exporters $1.3 trillion in hydrocarbon earnings over the next four years.
However, the Middle East is preparing for the post oil era as well…
And that’s not because they are running out of oil…
In fact, historically, Middle Eastern petrostates have turned to diversification
during periods of low oil prices. Today, diversification is especially important
due to the rapid changes and development of international markets, and demographic dynamics.
And there is ton of untapped economic potential in the Middle East region.
But, yes… These resource-rich
economies can also experience major socioeconomic development and growth setbacks, which highlights
the importance of economic diversification to achieve greater economic prosperity,
especially in resource-rich economies. And since they are quite rich and have
invested this wealth in improving the lives of their citizens, developing their infrastructure,
and preparing for a future without oil. They have constructed cutting-edge cities
and the necessary infrastructure, laying the groundwork for continued economic growth.
Countries in the Middle East have also started putting policies into place to
encourage regional integration. Through them, it is believed that the area would be able to
realise its full economic potential and maintain the stability of the nations that have experienced
faster rates of growth and development. Examples of such plans to diversify
include the Vision 2030 of Saudi Arabia and the Economic Vision 2030 of the United Arab Emirates,
both of which set out the nation's objectives to achieve the desired level of economic
growth and development by 2030. According to the World Bank Ease
of Doing Business Index, the Gulf nations in particular have advanced significantly
over the past ten years in terms of ease of starting a business, as seen in this graph
Moreover, the past decade has also seen the region embrace renewable
technologies and focus on the environment. The Middle East is going green — as Egypt
and the United Arab Emirates (UAE) are ready to host the next two significant
global summits on climate change, In fact, the UAE has increased its
prior commitment to reduce greenhouse gas emissions by 23.5% to 31% by
2030 when compared to business as usual. Qatar, a gas-rich nation, on the other hand,
has established its first ministry for climate change and declared aims to reduce
its emissions by 25% by 2030. However, by contrast…
The United Arab Emirates, one of the world's top oil exporters, has also cautioned that a
too-rapid shift away from hydrocarbons could trigger an economic disaster.
Gulf states also claim that oil is and will continue to be essential to the global economy.
And even if they run out of oil, the world will still see them as the supplier of the
Renewable Energy… Yes, that’s true…
The Middle East will also continue to be an energy hub in the future thanks to renewable energy (AKA
the sun, which the Middle East gets a lot of it). Large sums of money are currently being invested
by Saudi Arabia and the United Arab Emirates to construct enormous solar
power facilities in their deserts. The long-term goal is to supply all the
energy needed locally, sell the extra to the rest of the globe, and continue to be energy producers.
And another thing that needs to be highlighted is that…
The "word" Middle East refers to a number of nations, each of which has a unique
culture or economy, and they are not all entirely dependent on oil or petroleum.
For instance, Morocco: The nation depends on industry, mining,
etc. rather than oil. They might be impacted when oil runs out because of the high costs,
but most likely will move on to solar and wind power - of which they have plenty of sun and wind.
Iran: this is a diversified economy. Despite the sanctions in the history, they were still able to
sell oil. So, Iran will probably thrive post oil. Egypt: Tourism is a significant source of foreign
cash for Egypt. Another significant sector of the Egyptian economy is agriculture.
Israel and Lebanon: Both are highly diversified in electronics, computing,
pharmaceuticals, and tourism, so they will not face any problems either.
Similarly, Turkey's economy is also modern and diversified; the absence of oil will have no
impact there. So…
Only the countries like Saudi Arabia, Qatar, Kuwait and Libya are highly
dependent on oil and petroleum. And when the oil runs out, there is no backup.
Hence, they are attempting to diversify their largely reliant on oil economy for this reason.
Moreover, Time will eventually
reveal whether the Middle East and the Gulf are capable of diversifying their economy as
they make progress toward a post oil future. But, if oil-exporting Arab regimes continue
to prioritize the economic side of things and delay putting institutional reforms into place,
they may risk facing a new and more powerful "Arab Spring" in the twenty-first century.
Outro What do you think, is the world ready for
post oil future? Tell us in the comment section below. We will be happy to hear your thoughts.
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