Some of the Middle East's richest states risk running out of money in less than a decade as oil production is hit by the rise of clean energy, the International Monetary Fund (IMF) has warned.

Gulf countries including Saudi Arabia and the United Arab Emirates (UAE) are at risk from a collapse in oil consumption, the IMF said.

It puts them at risk of financial collapse as money for public spending runs out, and risks further destabilising the already war-torn region.

Global demand for oil will peak by 2040 as alternatives become readily available, the IMF said.

The world is entering an “age of oil abundance” because of new technology which allows more to be extracted, combined with government policies to cut down on fossil fuels and the growth of green energy alternatives, according to the fund's economists.

But that shift to clean power - along with greater efficiency and slowing population growth - means demand will peak at about 115m barrels a day. As a result, countries which rely on oil exports to balance their books face dire financial straits.

View more!

The IMF said countries in the Gulf Co-operation Council (GCC) region - which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE and accounts for a fifth of the world’s oil production - would be hardest hit.

Many of them have ultra-low tax rates and for years have relied heavily on oil revenues to fund citizens' way of life.

The countries' public spending rose from 20pc of GDP in 2007 to 30pc in 2014, partly accelerated by the Arab Spring in 2011, which originated with protests against low living standards.

At the same time, their hydrocarbon revenues have fallen, meaning that the region’s financial wealth could be depleted by 2035, the IMF said.

The IMF recommended that GCC countries should reduce government spending and increase non-oil fiscal revenues, doing both gradually to share the impact across generations.

The slumping share prices of fossil fuel companies have been a warning to the private sector which is adapting to the change, but Governments are far more exposed.

View more!

The IMF said: “Oil-exporting countries may need to be ready for a post-oil future sooner rather than later." The hazard has been compounded by countries hoarding vast reserves on the basis that oil would one day begin to run out, pushing up prices and so making their holdings more valuable over time. Instead ever-greater reserves have been identified, keeping prices down, and technological advances have made alternative sources of energy more competitive.

Now demand is shifting in favour of more environmentally friendly energy, the oil reserves will diminish in value, according to a report by Amy Myers Jaffe, published by the National Institute for Economic and Social Affairs (Niesr).

Venezuela has around 25pc of the world’s reserves but needs huge investment to repair and upgrade its facilities to extract the oil. The country has been mired in the world's worst economic crisis for years due to the actions of its ultra-left leaders.

Sauid Arabia has 22pc of reserves, Iran 13pc and Iraq 12pc.

The Niesr report said: “This reality of reserve ownership means that the burden of stranded assets risk will fall more squarely on the oil industries of sovereign nations, which are largely controlled by national oil companies.

“One key problem related to stranded asset risk is that elevated oil revenues that have historically supported government budgets will dry up over time, destabilising national institutions which in many petro-nations are already weakened.”

Internal repression could take over from patronage as a means of control as money dries up, Niesr said, while wars could either spike as Governments seek new means of exerting their authority, or fade as nations run out of money to fund conflicts.

It said: “Viewed through this lens, recent military build-ups in the Middle East by Russia, and Iran’s recent attacks on shipping and oil installations in the Persian Gulf, may take on deeper implications."