ON the eve of the Paris Air Show in June, Mike Turner, chief executive of BAE Systems, hosted a dinner for journalists at the George V hotel. The talk was about the company itself and BAE businesses such as Airbus.

Turner dropped one fact that got lost: after much speculation, BAE had started some exploratory work on a contract to upgrade the Tornado combat aircraft of the Royal Saudi Air Force. Two of the Saudi aircraft were at that moment in Wharton, BAE’s Lancashire complex, and hopes were high of an add-on to the Al-Yamamah deals of the 1980s, which netted Britain up to £40 billion.

BAE also wants to sell new Typhoon fighters, and other military equipment to the Saudis. Call it a dividend of the silent oil boom.

The news following on from the current oil-price spike has focused on Russia, where Roman Abramovich last week sold his 72% stake in the crude-oil producer Sibneft to state-controlled Gazprom for £7.4 billion. This comes at a time when analysts are debating the effect of high oil prices on the British and global economies.

Largely overlooked has been the $450 billion (£255 billion) windfall enjoyed by Middle Eastern Opec states — putting the amount of money flowing into Russia into the shade. So great has the Opec bonanza been that Middle Eastern states now hold more US government debt than China and Asia’s other emerging nations, according to the International Monetary Fund’s Middle Eastern expert, Mohsin Khan.

Sizing up this reality, City bankers, lawyers and accountants are edging into Russia and China, while dusting off and beefing up Gulf businesses established in the 1970s.

“They’re printing money in the Gulf,” said Fadel Gheit, a Wall Street oil-company analyst at Oppenheimer. “These guys were happy three years ago when oil was $30 a barrel. Now it’s $65 and it’s so high it’s making Opec uncomfortable.”

But this time, unlike during the 1970s oil boom, Arabs in London are keeping a low profile. Fresh tales of playboy princes are scarce.

“The Arabs don’t tend to show up in London in any great numbers until July, when the kids have finished school, and the local temperature has climbed to 40 degrees,” said a casino executive. “This year, because of the London bombings, it was very quiet.”

Still, the rainmakers in the City know where the money is and they are busy factoring together not only the high oil price, but also the effects of the 9/11 attacks, and US policy responses to that, including President George Bush’s war on terror and the fighting in Iraq.

“This combination hasn’t fundamentally changed the asset allocations of the major state agencies (such as the Saudi Arabian Monetary Agency, the Abu Dhabi Investment Trust and the Kuwait Investment Office),” said the IMF’s Khan.

But it is prompting Middle Eastern state agencies to seek more direct investments, according to Jameel Akhrass, London-based head of Middle East investment banking at Morgan Stanley, the Wall Street firm.

Earlier this year, Dubai International Capital, the international investment arm of Dubai’s crown prince, Sheikh Mohammed bin Rashid al Maktoum, bought Tussauds Group, the leisure park operator, for £800m. “We’re seeking to broker such deals,” said Akhrass.

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