A Turning Point: The Discovery of Oil in 1938
Saudi Arabia is a dry country, and most of its people lived as nomadic pastoralists before the discovery of oil. The government also earned some income from tourism activities as Muslims’ pilgrimages visited the holy city of Mecca. However, the country’s fortunes were transformed in 1938 when an American drilling company stumbled upon the largest oil deposits in the world in its drilling operations.
The discovery has transformed Saudi Arabia’s social, economic, and political infrastructure. The Saudi government has supported infrastructure development by developing modern ports, pipelines, wells, and refineries. The country has also enhanced social initiatives and industrial growth, which has uplifted the country’s stature globally.
Energy Sector: Key Driver of the Economy
The discovery lifted the energy sector to become the key driver of the Saudi economy. Until today, Saudi Arabia has been proven to have nearly 25% of the world’s oil reserves, making it the leading producer and exporter of oil. The country continues to develop its energy resources sector by encouraging greater investment, especially by foreign players. About two decades ago, the government permitted foreign companies to invest in the gas sector and downstream industries.
Encouraging Foreign Investment in Energy
Saudi Arabia has further ventured into the exploration of precious and semi-precious metals. Investments in the industry are expected to lift the country into a leading exporter of minerals. Saudi Arabia has discovered copper, tungsten, silver, potassium ore, gold, tin, zinc, nickel, iron ore, chrome, lead, bauxite, phosphates, and table salt. Further exploration in the Red Sea floor aims to probe the mineral-rich sediments to assess their commercial viability.
Saudi Arabia’s Role in International Affairs
The Kingdom has emerged as a strong player in international matters, particularly in the Middle East. It continues to influence critical political developments in the Muslim world, particularly the rising insurgency in Syria, Iran, and Sudan. The country’s acquired status in the region has caused strained relations with the West, China, Japan, and Southeast Asia. Most of these developed countries consider that oil has empowered Saudi Arabia to the extent that the government exercises bad influence in foreign relations.
The Kingdom has used oil to expand its economic power by venturing into tourism. Saudi Arabia continues to attract visitors from all over the world, and the money earned from oil is used to develop high-quality infrastructure. Recently, the country has invested billions of dollars earned from oil and gas to attract more tourists and diversify its economy.
Bibliography
Ishak, Phoebe W., and Mohammad Reza Farzanegan. “Oil Price Shocks, Protest, and the Shadow Economy: Is There a Mitigation Effect?” Economics & Politics 34, no. 2 (2021): 298–321. Web.