Petroleum In Saudi Arabia Essay Examples

Petroleum In Saudi Arabia Essay Examples

Oil and natural gas plays an important role in defining the political and socio economic status of Saudi Arabia, with the country taking the leading position as the leading producer and distributor of oil and other petroleum products in the world. Since the discovery of crude oil in Eastern part of Saudi Arabia in 1938 by the Standard Oil of California (SoCal), the economic status of the country changed tremendously as the source of government revenue was shifted from the levies collected from the pilgrimage to mecca, to mass exports of oil. The need to have a majority share
and control of oil extraction and distribution by the government of Saudi Arabia further led to the formation of the Arabian American Oil Company (ARAMCO) that granted fifty-fifty control of all the oil production in the country, thus increasing the economic and political control.
Political and socio economic power was further strengthened after the government of Saudi Arabia bought the entire Aramco in 1988 and it was later renamed Saudi Aramco. This enabled the company to explore and discover huge deposits of crude oil in areas that had not been touched, further increasing the global control of the oil industry (Gruty, 1999). The ability to control over 25 percent of the global oil industry has made Saudi to have a strong economic base as well as use this as a bargaining power in global economic issues. For instance, the country has acted in regulating political crises such as the Iraq War of 2003 and the Gulf crisis of the 1990 by using their influence in oil supplies to manipulate operations of participating countries (Champion, 2003). For instance, the Arab countries oil boycott that led to the 1973 energy crisis in the U. S led to the end of the Arab-Israel crisis as well as increased oil prices that further strengthened the country’s economic power..
Being the major exporter of oil and natural gases has also played a role in setting and regulating global oil prices as well as adjusting the oil outputs to adjust major global financial crisis such as the market fluctuation crisis of the 1990s. This indicates the fact that Petroleum has given Saudi Arabia a remarkable global representation as well as given them a bargaining power in matters of political and economic representation globally as a result of the major role that the country has played in global oil market.


Champion, D. (2003). The Paradoxical Kingdom: Saudi Arabia and the Momentum of Reform. New York: Columbia University Press.
Gruty, W. (1999). Prelude to Discovery. Saudi Aramco World, Vol. 50(1). Retrieved from

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