GCC governments are very keen to see international oil prices lifted to help reverse the trend in revenue losses incurred by their oil-dependent economies since mid-2014.
Economic diversification in the region has been slow, while trade has been affected by the negative effects of the Covid-19 pandemic both on businesses and the general economic environment.
The current severe cold wave in America and some other countries of the world has contributed to an increase in global oil prices, at a time when green energy projects cannot serve as an alternative amid the bad weather conditions.
Officials in some US states, for example, warn of catastrophes due to this historical cold weather that has left millions of people without heating as a result of the power supply cuts.
This wave has also disrupted much of the drinking water supply to the homes of millions of American families, at a time when they have lost half the electricity generation capacity in the affected states due to the freezing of oil wells, natural gas lines and wind turbines.
Some nuclear power plants and coal-fired stations are the only ones in operation.
The severe weather conditions have impacted businesses in cold countries due to the closure of shops and retail stores, which has a knock-on effect on land and air freight and other economic sectors. All these factors are pushing global oil prices to rise. Consuming countries are procuring more quantities of oil fearing that the cold weather may disrupt US oil production.
Indeed, some US states have issued decisions banning the export of quantities of natural gas until supplies to domestic power plants is fully restored.
The recent rise in global oil prices is also attributed to the big cuts in production agreed by the Organization of the Petroleum Exporting Countries (OPEC) and other producers allied with this organisation.
The measure reduces output for an agreed period. An uptick in oil prices, together with the rollout of vaccination campaigns, will help promote economic growth and the revival of stalled businesses in the tourism and hospitality fields, and spur the movement of tourists and people.
Faced with power cuts in the face of freezing cold weather, people cannot turn to renewable sources, such as wind and solar, because they cannot provide enough energy in the circumstances.
Consequently, huge investments will be required in projects to meet the energy need of the population facing such exceptional circumstances.
On the flipside, heat waves linked to global warming can also cause disasters for humanity similar to the cold wave that is currently being witnessed in the United States.
Thus, everyone must be prepared to respond to weather-related challenges and invest in projects designed to mitigate such impacts in the future.
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