THE possibility of sustained low oil prices has been raised after the former long-term adviser to Saudi Arabia's government made clear the Gulf state could cope with low prices for "at least eight years".
It comes amid increased pressure on the UK Government to introduce immediate tax breaks to help out the beleaguered North Sea oil and gas industry and to stem the haemorrhaging of thousands of jobs.
MPs are due to gather for their first Westminster debate since the crisis struck while in Aberdeen Jim Murphy, the Scottish Labour leader, and Ed Balls, the Shadow Chancellor, for more talks with industry representatives to discuss the ongoing crisis.
Mohammed al-Sabban, who advised Saudi Arabia's petroleum ministry for 27 years before leaving his role last year, told the BBC: "Saudi Arabia can sustain these low oil prices for at least eight years.
"First, we have huge financial reserves of about 3tn Saudi riyals(£530bn). Second, Saudi Arabia is embarking now on rationalising its expenditure, trying to take all the fat out of the budget."
He said Saudi Arabia was worried but had to wait for the "full medicine that we have prescribed for ourselves to take its course".
Despite the halving of the oil price, the Gulf state, the largest producer within the Opec producers' cartel, has refused to cut production in the hope of ousting smaller producers and so retaining its share of the oil market, which has faced pressure because of the shale gas revolution in America and falling demand from countries like China.
"To shorten the cycle, you need to allow prices to go as low as possible to see those marginal producers move out of the market on the one hand and also, if there is any increase in demand, that will be welcomed," added Mr al-Sabban.
UK industry insiders have warned that the slump in the oil price threatens future investment, but there appears to be little appetite within Whitehall for a hefty tax cut.
Nicola Sturgeon, the First Minister, has urged David Cameron, the Prime Minister, to reverse the 12 per cent tax hike on profits introduced by the Treasury in 2011.
The department said that if oil remained at $49 a barrel for the next three years, then Holyrood's finances would see a fall of almost £19bn in revenue.
Mr Murphy branded such a policy as "foolish", arguing that the economic plan - which some believe could be demanded by the Nationalists in return for propping up a Labour government at Westminster - did not make sense.
"People are celebrating that it's cheaper to fill up your car at the forecourt just now but if the SNP get their way, the economy of Scotland will be entirely dependent on what happens to a fluctuating and limited commodity such as oil and that doesn't make sense," insisted the party leader."
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