For much of the world, oil wealth is a curse. Endowed with ample reserves of hydrocarbons, the likes of Nigeria, Angola, Kazakhstan, Mexico and Venezuela frittered the benefits away, wrote Bloomberg columnist David Fickling.

“The current price war in oil markets will only hasten the moment when the unsustainable nature of Gulf economies faces a brutal reckoning,” he said.

As an example, the author cited the situation with the financial assets of the Saudi Arabian government - the Central Bank's gold and currency reserves plus sovereign wealth funds minus government debts. “These declined to just 0.1% of gross domestic product from 50% over the four years through 2018 as crude plunged from levels of around $100 a barrel at the end of 2014. The kingdom is now likely to be a net debtor for the foreseeable future, even if prices rise back above $80,” he said.

According to the IMF, over the same four years, the net financial assets of the six Gulf monarchies declined by about half a trillion dollars, amounting to two trillion, Fickling said. “Even if peak oil demand doesn’t hit until 2040, that remaining sum could be depleted by 2034, according to the Fund. Oil at $20 a barrel would run it down even faster, emptying the coffers as soon as 2027,” he added.

The columnist added that, according to the IMF, if the oil price is in the range of $ 50 to $ 55, then the gold and foreign exchange reserves of Saudi Arabia will be reduced to about five months of import costs already in 2024. According to him, such an option is very alarming, “bringing the kingdom within months of an unthinkable balance-of-payments crisis and the abandonment of the dollar peg, which has underpinned the global oil trade for a generation.”