I found this whole article worth reading, but here are some selections.
THEIR BUDGETS don’t add up anymore. Algeria needs the price of Brent crude, an international benchmark for oil, to rise to $157 dollars a barrel. Oman needs it to hit $87. No Arab oil producer, save tiny Qatar, can balance its books at the current price, around $40 (see chart).
So some are taking drastic steps. In May the Algerian government said it would slice spending in half. The new prime minister of Iraq, one of the world’s largest oil producers, wants to take an axe to government salaries. Oman is struggling to borrow after credit-rating agencies listed its debt as junk. Kuwait’s deficit could hit 40% of GDP, the highest level in the world. [...]
[...] The world’s economies are moving away from fossil fuels. Oversupply and the increasing competitiveness of cleaner energy sources mean that oil may stay cheap for the foreseeable future. The recent turmoil in oil markets is not an aberration; it is a glimpse of the future. The world has entered an era of low prices—and no region will be more affected than the Middle East and north Africa.
[...]
Remittances from energy-rich states are a lifeline for the entire region. More than 2.5m Egyptians, equal to almost 3% of that country’s population, work in Arab countries that export a lot of oil. Numbers are larger still for other countries: 5% from Lebanon and Jordan, 9% from the Palestinian territories. The money they send back makes up a sizeable chunk of the economies of their homelands. As oil revenue falls, so too will remittances. There will be fewer jobs for foreigners and smaller pay packets for those who do find work.
[...]
A Middle East less central to the world’s energy supplies will be a Middle East less important to America. Russia may fill the void in places, but its regional interests are narrow, such as its determination to preserve its Mediterranean port at Tartus in Syria. It does not wish to—and probably cannot—extend a security umbrella across the Arabian peninsula. China has tried to stay out of the region’s politics, pursuing only economic benefits: construction contracts in Algeria, port concessions in Egypt, a wide range of deals in the Gulf.
As Arab states become poorer, though, the nature of their relationship with China may change. This is already happening in Iran, where American sanctions have choked off oil revenue. Officials are discussing a long-term investment deal that could see Chinese firms develop everything from ports to telecoms. It is framed as a “strategic partnership”, but critics worry it could leave China in control of the infrastructure it builds, as it has in some indebted Asian and African countries. Falling oil revenue could force this model on Arab states—and perhaps complicate what remains of their relations with America.
[...]
