It is 174 miles long and a maximum of 16 miles wide and is the world’s largest oil field, producing about 7 per cent of the world’s supply.It has been a reliable supply and a huge amount of oil is clearly left. The theme is that Saudi Arabia has had an exceptional track record as the world’s oil steward, with 70 years of outstanding performance as a producer and an advocate of “fair pricing”. Given that technology is always advancing and more oil will almost certainly be discovered, that sounds all right.But is it? I have been looking at an intriguing report by Mathew Simmons of Simmons & Company International, presented to the Hudson Institute in Washington last month. But at least there is nearly 90 years of supply in the Middle East, at current rates of production, and more than 40 years of supply for the world as a whole. The obvious moral is that as the world’s oil is gradually depleted, the Middle East will become more important, not less. But by its very nature, the exercise does not tell you which scenario is the one to go for.What one can say is that the risks of a spike in the oil price must be quite high. Under those circumstances the present growth phase will continue, even speed up.So what will it be? The joy of scenario planning is that it makes people think through the consequences of different events so that they are prepared.

The principal reason is the fragility of the Middle East.The two graphs above, from BP’s annual energy statistics, show how the region dominates the world’s proven reserves and also has the highest ratio of reserves to production. The reason was a row between the company and Russian authorities and it now seems that supplies will continue. But Yukos pumps 2 per cent of the world’s crude, and the threat underlined the fragile state of the global energy market.
So how bad are things? The clearest analysis I have seen comes from Nariman Behravesh at World Markets Research Centre, who thinks oil markets are in the most precarious situation since the early 1980s and are the biggest single threat to the global recovery over the next couple of years. Obviously, we as individuals can’t do much, except perhaps make the next new car a fuel-efficient one, although businesses can and should think about the implications of big swings in energy costs.

Growth will be slow, particularly on the continent, as present forecasts are based on oil going down in price, not up.And lastly, the crumble – the oil price crumbling back down to the $20-$30 a barrel region. (The UK’s position, I imagine, would be broadly neutral as we are still, just, net exporters of oil but would suffer from slow growth in export markets.)Crunch is oil staying more or less where it has been for the past couple of months, between $35 and $40 a barrel. The market is tight; Saudi Arabia is the only country with any spare capacity and its oil facilities are under terrorist threat; and other big producers, such as Iraq, Venezuela and Nigeria, for differing reasons all face possible disruption of supply.Mr Behravesh sketches three scenarios: the crisis one, the crunch one and the crumble one.Crisis is oil at $65 a barrel. That could be triggered by a combination of a terrorist attack in Saudi Arabia, disruption in Iraq and strikes in Venezuela. The effect would be most serious in continental Europe and the Asia/Pacific region, with Germany and Italy both pushed back into recession, and South Korea and China facing much slower growth. The US would suffer but not as gravely as continental Europe, while Russia would do well out of it all. A threatened halt of oil supplies from Yukos, the largest Russian oil company, sent the oil price to a 14-year high last week.