Sticky end: Middle Eastern oil
With
no end in sight to the global oil glut, Middle Eastern producers fear a
repeat of the 1970s and 1980s. Back then, giddy prices drove the search
for oil elsewhere. The world was soon pumping so much that prices
crashed, and stayed low for 20 years. For the Middle East that meant
rising unemployment and for some countries, such as Algeria, unrest and
civil war. Since then a decade of high prices has given regional
producers a $2.5 trillion cushion. But the past year’s halving of prices
has forced them to deplete their hoard—even to borrow. For the richest
that is fine: they can forgo income while their low-cost oil recoups
market share from costlier sources, such as shale. For poorer ones like
Algeria and Iraq, the squeeze will come sooner. But even Saudi Arabia,
the regional giant, will have to wean itself off income from the sticky
stuff.
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