Whichever way you look at it, the Middle East’s oil producers need to change.

The world’s energy markets have entered a period of relative calm following the six-month agreement by oil producers to reduce output. But while the immediate concerns caused by the terrifying collapse in prices from June 2014 to January 2016 have dissipated, the underlying threat to the region has not.

Global energy demand is rising by about 2 per cent a year, but the growing capacity of non-Opec production, the potential additional capacity to come on stream from Libya, Iraq and Iran, and the increased competitiveness of unconventional production, such as US shale oil, means the region’s producers will have less ability to influence oil markets, unless there is a surge in global demand, or a significant long-term outage in production.

In this environment, to continue to allow the world’s energy markets to define the region’s economic prospects is a game of diminishing returns.

Middle East producers must shift their focus from managing oil prices in the short term to redefining their economies for a post-oil future. As a priority, the region must follow through with promised economic reforms to stimulate private enterprise, end over-consumption of energy, diversify revenue streams and stimulate job creation.

But there is also an opportunity for oil firms to redefine their purpose. While consolidating operations, reforming procurement and rephrasing capital spending is vital work in the short term, they should utilise their vast human and capital resources to become hubs for the research and development of new technology.

 Agenda cover

Agenda cover

Agenda cover

Read our cover story on adapting to the new oil prices