Saudi Arabia: The oil giant

Oct 19, 2013 No Comments by


                Saudi Arabia is an Islamic country situated in Middle East Asia. It is a neighbor to other Middle Eastern countries like Israel, Jordan, Iraq, Kuwait, Qatar, United Arab Emirates, Oman, and Yemen. Some factors contribute for its name ‘The oil giant’ like, it is the largest exporter oil in the world, it is second largest oil producer (after Russia. US is expected to top the list, “Thanks to shale oil boom”), it accounts for world’s largest proven oil reserve next to Venezuela and also fifth largest natural reserves (after Russia, Iran, Qatar, and the United States).

Saudi Arabia has no political parties and no modern written constitution because it still follows monarchy (kingdom ruled by a King or Queen) and the Quran and the Sunnah are declared to be the country’s constitution. Its economy is mainly driven by revenue generated by oil. 2012 GDP contribution by different sectors were agriculture: 1.9%, industry: 64.8%, services: 33.3%. Agricultural income comes from export of wheat, dates, dairy products, eggs, fish, poultry, fruits, vegetables and flowers. Roughly 90% of export earnings come from the oil industry.

In 2012 total revenue from tourism (Haj and Umrah) was more than SR 62 billion, contributing 3% to its GDP. Saudi Arabian Monetary Agency (SAMA) being its central bank controls and regulated financial aspects of the country. Its official currency is Saudi Riyal (SR), presently around 3.75 SR is equivalent to 1 US$.

Saudi Arabia main imports are: machinery, mechanical appliances and electrical equipment, transport equipment, base metals, arms, chemicals and related products and vegetables. Main import partners are: China, United States, Germany and Japan. Others include: South Korea, United Arab Emirates, France and India (63 % of basmati rice is exported to Saudi Arabia). Saudi Arabia’s non oil exports are: metals, machinery, transport equipment, plastic, dates, etc. In 2013, top importers of non oil products from Saudi are UAE (14.74), China (13.10), and Singapore (6.23)

Saudi Arabia is one of the founder countries (with Iran, Iraq, Kuwait and Venezuela) of OPEC. Being a major country in OPEC, large producer and exporter of total petroleum liquids in the world and proven reserve in the world gives Saudi Arabia dominating power in oil price decision over world oil market.

Based on the list of the world’s top 15 military spenders in 2012, Saudi Arabia ranks 7th for spending $56.7 billion on its military and is also the 7th largest arms importer in the world. Major suppliers of arms are US and Europe. In 2010 the biggest arms sale in American history was made to Saudi Arabia ($60.5 billion EST.)

There have been continual conflicts within the nations and neighboring nations of Middle East with respect to human rights, labor rights, elections, foreign policies, border area etc. Strict punishments against crime, ban on women driving (it is the only country in the world to ban women driving), non involvement of women in municipal elections, Saudi-US relationship and differences between other religious group are some of the major reason for tension within the nation.

Saudi Arabia has friendly relationship with other nations of world like U.S (major importer of oil and exporter of weapons), china (major exporter), UAE, Canada, Japan, India (grant in 1990) etc whereas it is not on such good terms with Israel, Iran and Egypt. The major reason for conflict with Israel was huge number of Jewish migrating to Arabs settled land and driving away Arabs out of Israel by defeating them. Since then the Saudi has been raging war against Israel and supporting Israel enemies. Issues with Iran are on differences between sunni and shia. Iran is also anti US and Saudi is pro US. Saudi has centuries old rivalry with Egypt. US-Saudi Arabia relations has also been stained after 9/11 attack (14 out of 19 people involved were citizens of Saudi).

Presently Saudi Arabia is member country of many international groups like IMF, Interpol, OPCW, OPEC, UNESCO, WHO and WTO. There are around 140 embassies of different countries of the world in Saudi Arabia.

Oil being major source of power all over the world there will be large and continued demand for oil. Saudi is in beneficial spot by having large oil reserve but the question is how long? Oil Shale (substitute for crude oil) and renewable sources of power like solar, wind, Tidal energy, etc are being considered having cost, availability and sustainability in mind. So, the dominance of Saudi might come to an end in future.


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