A flat world sounds like something from the dark ages. Indeed, a world of flat oil prices could, for some, be a very unpleasant place. The lack of upward movement has already had an impact on the behaviour of major oil-producing nations such as Saudi Arabia, Qatar, Kuwait, UAE, Oman and Bahrain. These nations have slowed the pace of budgetary expansion from a regional average of 14 per cent growth last year to less than 3 per cent this year.

A report from Moody's calculates the Brent crude oil price required to generate the revenue needed to cover spending plans (the break-even price). Since 2008 spending has more than kept pace with a doubling oil price. And those spending plans are still rising, even if the oil price is not. The UN forecasts that the labour force in the region will grow at 10 per cent annually until 2020. Investment in job creation is crucial. Significant spending cuts will be hard to push through. For example, the break-even price for Oman is $100; for Bahrain it is $130. Oil is trading at $109.

Should oil prices and regional government revenues suddenly drop, most of the Gulf nations can fall back on their sovereign wealth funds. Not Oman. Its SWF amounts to just two years of spending. In Bahrain oil accounts for only a quarter of its GDP but it is 87 per cent of revenues. It is the only Gulf economy running a budget deficit, as Bank of America points out. Since 2008 its debt to GDP ratio has more than doubled, to 61 per cent.