Dear Oman, its now or never.

The current oil price crash should be heeded as a lesson going forward, and I truly believe this latest fallen oil price is different and by all means it should raise an alarm that dependency on oil is thing of the past.

In previous years, balancing the price was as easy as getting the OPEC to cut down their supply and Viola in no time situation comes back to normality. .

But long gone the good old days, and OPEC is no longer the decisive factor, a lot of headwinds came to play in the recent decades that challenges OPEC Superiority in Oil price markets. Headwinds that not only keeps the inventory high, the like of US Shale, Libya, Iraq & Nigeria pumping at full stream, some goes as far as making the oil semi obsolete the like of renewable energy, the introduction electric cars etc. Hence, its no surprise that all top analysts and executives in oil and gas industry agree that Oil demand peak may come as early as 2030 if not sooner.

As stated, that cushion called OPEC that we have enjoyed for so many years is no longer a bullet proof, we indeed find ourselves alone, as a result Oman is pushed in the corner and if we don’t react now, the ramifications would be dire. We just cannot and should not depends on oil as our main economical vehicle especially in a country where Oil & Gas accounts for 70% of the overall Revenue, of which we ended up with 5.5 Billion Omani Rials (RO5.5bn) deficit last year (2016) and the current 2017 budget already forecasts a spending of RO11.7bn and revenues estimated at RO8.7b, leaving an anticipated deficit of around RO3b.

We maybe pegged by the dollar now due the massive foreign reserves we have accumulated in the hay days, but that reserves is depleting and some say if situation continues we are looking at currency devaluation as early as 2018.

 And not to mention that most of the easy oil is exhausted and getting out the difficult oil could prove to be uneconomical and not feasible in the current economy going forward. And even if for some miracle and technological innovation we manage to extract that oil in a cheaper manner, it wont be any time soon, which could prove to be too late and to make the matter even worst, the current proven reserves of 5.5 billion barrels at a production rate of 800K to 1MM B/D, the same would be exhausted in 20 years anyway. If this is not a wake up call, than I don’t know what it is.

Like any problem, and whether its seems as an obstacle or opportunity it all depends how we approach it. And I am confident we have bright people in our midst who are capable to convert it to an opportunity that could be the beginning of something great. And rest be assured, Oman has all the ingredients to be very strong economically, one need just to look at its worldwide known peace and stability, its superb foreign policy, strategic location, its wonderful people, friendly culture and most of all at its amazing & beautiful terrains. 

I don’t claim myself to be an economist; actually I am far from it. All I know our fall back plans are getting limited as the days goes by. Dear Oman, its now or never.

Salim Al Harthy (Twitter=> @salimphoto)