The International Monetary Fund believes that Gulf Arab nations could lose a significant amount of their fortune in the next 15 years as a result of plunging sales from their hydrocarbon industries if reforms in their fiscal policies are not achieved.
The six-nation Gulf Cooperation Council - comprised of some of the wealthiest countries in the world with around $2 trillion in total assets - accounts for more than a fifth of the world's oil supply.
In recent months, the Gulf region has been badly saddled by a decrease in oil prices that all started in 2014 and 2015.
The International Monetary Fund disclosed that while lower crude prices have encumbered these economies to produce non-oil profits and fix their financial portfolio, the impact of lower hydrocarbon revenue "is yet to be totally offset."
The IMF also noted that world demand for oil could increase around 2040 or even sooner in case of a much broader regulatory pressure for energy efficiency and environmental protection.
For decades, the Gulf nations have used their energy assets to provide employment opportunities for millions of its people, part of the rulers' social contract that rewards political acquiescence and lifelong education.
The IMF's worries come as Bahrain's island nation faced a loan default in 2018 and got a $10 billion financial rescue from its neighbors. The public debt accounts for 93 percent of its gross domestic products.
But the IMF cautioned that even oil empire Saudi Arabia and reserve-heavy Kuwait face the same potential economic dilemma being experienced by the Gulf Cooperation Council, a coalition of six nations that also includes Oman, Qatar and the United Arab Emirates.
GCC authorities have only slowly rolled out their cost-cutting measures to avoid social discontent, like the imposition of value added tax in some GCC states. But the majority keeps struggling to balance fiscal consolidation and growth.
The introduction of VAT and excise taxes was positive, the IMF said. There is "considerable potential" to build on this development, it added.
GCC oil output accounts for 20 percent of global supplies, and while the extraction costs remain very low, particularly onshore in Saudi Arabia, new shale production in the US is posing a new challenge to their influence on world oil prices.
While GCC member countries largely increased their stockpiles from 1997 to 2007, they started spending quickly in the years that followed in part to head off divisiveness amid the Arab Spring protests in 2011. Oil prices in January 2016 plummeted to $30 per barrel.
