(MENAFN- Gulf Times) Pick up a newspaper anywhere in the world today and you are likely to see a prominent story about low oil prices, the impact this is having on economies, and speculation about where the price might end up at some arbitrarily chosen point in the future.
Given that major investment and budgeting decisions, both in the public and private sectors, are reliant on where the price of oil stands, we should not be surprised that policy makers and business leaders are eager for that critical piece of insight and guidance.
For this reason, the recent Apicorp Energy Forum was an important opportunity. The combination of themes it covered - policy, outlook and finance - along with the sheer number and variety of senior energy industry stakeholders it attracted, made it a multifaceted and unique occasion.
High-profile policy makers and ministers shared a platform with experienced bankers and finance professionals, respected researchers and analysts, and business leaders from across the private sector. There have been few, if any, other opportunities since the oil price started tumbling last year, to tap into such a wealth of knowledge and expertise in one place.
The views expressed during the forum are the ones I would encourage global decision makers and indeed the media to pay particular attention to. And while no one has a crystal ball when it comes to predicting oil prices, some people have better information than others.
One of the key takeaways was that most believe the days of $100 oil are over. Some 91% of the circa of 350 delegates polled during the forum said that the Brent oil price will remain below $70 for the coming 12 months. However, there was a broad alignment of views that it will rise from the current lows of $40 a barrel. Most see the oil price settling around $65 a barrel in 2016, which would certainly ease some of the current financial strain some governments are facing.
Another takeaway was that investment in the Arab energy sector will continue, regardless of the current fiscal pressures. Oil ministers from Saudi Arabia, Bahrain and Egypt all expressed a clear commitment to ensuring spending on energy-related infrastructure, skills and technology are maintained. There was also broad acceptance that investment in the Mena energy sector will need to total $685bn over the next five years; and that cooperation between Arab states will be critical for these investments to progress.
How oil exporting countries can best deal with lower revenues was also addressed at the forum. Some 45% of the experts gathered stated that diversification was the best means of dealing with the issue. This was followed by 34%, who favoured subsidy reform. Only 16% see spending cuts as the preferred option.
The truth is a combination of all three policy options is most likely needed. However, without wanting to speculate too much, clearly if this is what the energy industry's experts are saying, one should be reasonably safe to assume all of these options are being considered by the relevant policy makers. This information should be reassuring to the markets. Expert advice and research is clearly being made available, and indeed has been provided, to those making government policy.
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