The six Arab monarchies of the Persian Gulf – Bahrain, Kuwait, Qatar, Oman, Saudi Arabia and the United Arab Emirates (UAE) – are relatively small actors in the global economic system, but are of disproportionate importance because of their enormous reserves of oil and gas, and given the economic and strategic importance to the rest of the world of a stable supply of these commodities. These six states possess just under 30 per cent of the world’s proven oil reserves, and account for about 24 per cent of the global oil trade. For the Gulf states, hydrocarbons are crucial for the state’s ability to rule. Oil provides about half of the Gulf’s gross domestic product (GDP), with the importance of natural gas considerably smaller but having markedly risen so far this century.

For net hydrocarbon exporting states such as these, however, this bequest from nature is both a blessing and a curse. While striking oil may seem like a country’s equivalent of winning the lottery, and does create enormous windfalls that allow for rapid development, new infrastructure, and a greater economic power than otherwise, hydrocarbon revenues also have profound impacts on an economy. Rents impact exchange rates, or create inflationary pressure when exchange rates are fixed. Natural resources create highly-skilled, well-paying jobs, but relatively few of them, while also pushing up wages across the economy more widely. Oil demands large investments, which are diverted from elsewhere in the economy. And scholars have made a strong argument that oil-intensive economies are especially unlikely to democratize, and that rents may in fact create conditions for repression and, in some cases, internal or regional conflict. Historically, oil has attracted external attention and at times intervention in the region, which has rarely been welcomed and often has proven very disruptive. At the same time, the Gulf states have struggled to diversify their economies into new areas. The revenue from oil (and later, gas) has been simply too large, and the political bargains made among elites, and between state and society, would be imperilled by any reform that is excessively rapid or extensive.