Not for the first time, the world’s global and regional powers find themselves at odds over the Middle East, a part of the world that remains of significant strategic interest and the locus of potentially even more serious ethnic unrest. It is therefore remarkable that Middle Eastern oil producers, along with those of Russia, Venezuela and Nigeria – most of which have seen a deterioration in their political relationships with the US – have become the stabilising financial force in the global economy and in terms of the US dollar. Can this last?

Until recently, relative stability in the global economy has been attributed mainly to China, seen by some economists as the core of a Bretton Woods II system. But if this was what global balance was about, it is a diminished force. Petrodollars will probably provide all oil exporters with a total current account surplus of about $450bn in 2006, up from $347bn in 2005 and compared with just under $150bn in 2000. Developing Asia, including China, generated an external surplus of about $155bn in 2005 and it will be little changed this year. The current account surplus of the oil producers will be about three times that of developing Asia in 2006 and close to that in 2007, assuming the oil price falls back a bit next year. There are no Asian-style mutual economic interests here, but the financial effect of these capital flows is the same.