Oil and the Middle East: Vague Aspirations

There is a prevailing feeling in the region that high oil prices are beneficial for producing countries. Of course, the public, officials and oil experts have yet to arrive at any concept of what a reasonable price level should be. Is it $40 per barrel, the prevailing idea from two years ago, or $50 a barrel, the situation last year, or $70 a barrel, as the situation stands today, or $100 a barrel, which is the expectation for next year?
The “optimism” on the part of some people has been lifted by the impact of high prices on the international economy. In the past, a price rise of only several dollars had a negative effect on the rest of the world’s countries. The growth rate would dip and demand for crude oil would fall, while inflation and interest rates would rise.

..Hence, where is the danger, and why?

The danger lies in the “nihilistic” view by a wide segment of the population that oil proceeds will continue to flow without interruption and that expenditures can continue, without savings. Also, it is believed that investment can take place in shares markets as if they are casinos, and not long-term projects with their own rules and regulations.

One can also be cautious about the critical situation the international energy industry is experiencing, as well as the deteriorating political situation in the Middle East.

Dar Al Hayat