The Role of Oil in the Kingdom’s Economic Growth
One of the most transformative events in Saudi history was the discovery of oil in 1938 near Dhahran. This discovery would go on to change the trajectory of the kingdom, transforming it from a largely agrarian and pastoral society into one of the world’s largest oil producers. The kingdom’s vast oil reserves became the foundation of its economy, bringing immense wealth and elevating Saudi Arabia’s standing on the global stage.
The Saudi government, recognizing the potential of its newfound oil wealth, established the Saudi Arabian Oil Company (Aramco), which played a central role in managing and developing the kingdom’s oil resources. Over the decades, oil revenues funded massive infrastructure projects, from highways and airports to schools and hospitals. The kingdom’s cities, such as Riyadh, Jeddah, and Dammam, were transformed into modern urban centers, attracting workers and investments from around the world.
Oil also enabled Saudi Arabia to pursue an ambitious foreign policy, establishing the kingdom as a key player in regional and global affairs. As a founding member of the Organization of the Petroleum Exporting Countries (OPEC), Saudi Arabia has wielded considerable influence over global oil prices and production levels. Moreover, the kingdom’s oil wealth has enabled it to provide financial aid to other nations, particularly in the Arab and Islamic world, further solidifying its role as a leader in the region.
However, reliance on oil also brought challenges. Fluctuating oil prices and global efforts to transition away from fossil fuels have underscored the need for economic diversification. Recognizing this, the Saudi leadership has embarked on ambitious reforms aimed at reducing the kingdom’s dependence on oil, a central theme of the Vision 2030 initiative.
