Oil price swings are not only a problem for consumer countries but also for producers, particularly those with oil sectors that have a central role in their economies. A new report by Columbia University’s Center on Global Energy Policy explores the response to a downward cycle in oil prices and dwindling revenue streams by the Gulf Cooperation Council (GCC) economies: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE).

The sharp decline in the oil price has undoubtedly altered the economic outlook for the GCC economies as a whole. This includes current and, what is to be expected, future budget deficits over the coming years, even if oil prices recover some of their past three-and-a-half-years’ losses in 2017.

Intraregional differences between exist between GCC economies, noted the report. Some of the smaller GCC members, particularly the UAE and Qatar, are undoubtedly better positioned than Saudi Arabia, owing to their considerably higher per capita wealth that relates to their large hydrocarbon resources relative to their small populations. The UAE is protected by among the world’s largest Sovereign Wealth Fund (SWF) portfolio.

Saudi Arabia’s fiscal position is more complicated than that of its GCC neighbors. The country’s large economy, coupled with its considerably larger population and lesser per capita wealth than those of smaller Gulf sheikhdoms, implies Saudi Arabia is highly vulnerable to midterm budget fluctuations.

Nevertheless, the past years of lower oil prices have proven to be a time in which structural economic reforms looking beyond oil have become more politically feasible in the Gulf. This includes long-term challenges such as job markets, energy subsidies, and other citizens’ benefits historically deemed untouchable by the government.

If the time of lower oil prices has been one of many economic challenges, it also has been one of opportunity. The past years have shown national discourse in the oil-producing Gulf states can popularize ideas such as the need to reduce resource waste, and to think more systematically beyond oil as the mainstay of the region’s economies.