Economy of Saudi Arabia

Saudi Arabia discovered that oil exists in its kingdom by the year 1936. Now, Saudi Arabia is widely known as the largest exporter in oil industry taking 90% of the export business in the country. It is estimated that around 1.3 million tons of oil is produced daily. That is four times higher than Norway which is quoted as the second largest oil exporter and five times higher than the amount of oil, United States has. In the year 2003, Saudi Arabia produced at least 9.95 million barrels of oil and petroleum products. It looks like a very high amount of oil products, but actually it even deflated from daily production of ten million barrels in the year 1980. With these figures, they are hoping that the oil industry and exporting business can still last up to 90 more years.

The petroleum industry is usually developed at the towns of Al Jubayl and Yanbu near the Red Sea and 14 more oil fields are scattered in Saudi Arabia. At places like Ras Tanura and Ras Hafji, located on the Persian Gulf, is where oils are refined. Some oils are also shipped to Bahrain to be refined. Most countries that consumes and trades oil with Saudi Arabia includes: United States of America, Japan, Singapore, France, Netherlands, and South Korea. Since there is a big need for oil workers in Saudi Arabia, there are heavy foreign employment from neighboring Arab countries and parts of Southeast Asia. And because oil is a major business, they give importance to their oil workers by building schools, hospitals and giving other benefits for the family as their incentive. As a member of the OPEC or Organization of Petroleum Exporting Countries, Saudi Arabia has a lot to say with regards to the amount of oil that should be pumped. Therefore, making a big impact on the decreasing and increasing of petroleum product’s prices.

Although Saudi Arabia is abundant in oil, it is one of the major countries that imports food related products. Saudi Arabia has a water scarcity that is why there is a limited supply only on Asir. The country’s traditional income such as fishing and farming lost the people’s interest to be employed because of the high salary they can get through oil-production-related work. Agricultural employment only has eight percent of the country’s work force and contributes only five percent in their gross domestic income. They are also spending their budget on importing machineries and equipments as well as chemicals.

Aside from the ones mentioned, Saudi Arabia also has wheat, barley, vegetables and some livestock production, but these are not sufficient enough to be distributed to the whole nation. They also venture businesses in manufacturing such as fertilizers, metals, plastics, chemicals and pharmaceuticals.

Islam, being the most influential religion in every aspect of Arab’s life, also gives additional income to the country’s economic growth. With thousands of visitors traveling from all over the world to participate or just witness their annual hajj or pilgrimage, encourages tourism with nearly two million people coming to Mecca, Medina and along the Red Sea Coast. From this, it is estimated that the income is more or less US$2 billion a year.

Related posts