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In just a few decades, Saudi Arabia has gone from an economy based on religious pilgrimages to one of the most economically influential countries on the global stage. The transformation began after the discovery of oil in the late 1930s, an event that forever changed the trajectory of the country located in the Arabian Peninsula.
The discovery of oil in Saudi Arabia in 1938 marked the beginning of an unprecedented economic transformation in the Middle East. Until then, the country was a young monarchy with limited resources and an economy sustained primarily by religious pilgrimages to Mecca and Medina. With the introduction of oil into the equation, the arid territory became one of the world's largest energy producers and, within a few decades, became one of the largest economies on the planet.
Saudi Arabia has used the revenue from exporting the resource to modernize its infrastructure, build cities, strengthen its institutions and exert geopolitical influence on a global scale. The country’s trajectory from its first drilling to its establishment as one of the world’s richest nations reveals how a single natural resource can profoundly alter the destiny of a nation.
Saudi Arabia: From desert to energy powerhouse
Until the early 1932th century, Saudi Arabia's economy was focused on subsistence activities and the annual movement of Muslim believers to Mecca and Medina. The kingdom was founded in 1933 in a context of low government revenue and poor infrastructure. In XNUMX, the Saudi government signed an agreement with a US company, the Standard Oil Company of California, to begin oil exploration in the territory.
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After five years of prospecting, on March 3, 1938, oil was found in the Dammam No. 7 well. The discovery marked the beginning of the commercial exploration of the natural resource and inaugurated a new phase for the country.
Formation of Saudi Aramco
The initial exploration was carried out by foreign companies, which operated with authorization from the Saudi government. The company responsible for the operations evolved until it became the Arabian American Oil Company, which would later become known as Saudi Aramco. With the growth in production and the increase in exports, oil began to generate significant revenues for the state.
In the following years, Saudi Arabia began to increase its stake in the company, until it assumed full control of Saudi Aramco in 1980. The nationalization of the company guaranteed the country control over its resources and the destination of the profits obtained from the production and sale of oil.
Saudi Arabia's economic expansion and infrastructure
With the revenue generated by oil, Saudi Arabia invested in basic infrastructure, building cities, hospitals, schools and highways. Regions such as Riyadh and Jeddah were modernized with resources from the energy sector. The government also financed social programs, created jobs and promoted large-scale urbanization policies.
These investments have positioned Saudi Arabia as one of the richest nations in the world, with oil being the main economic driver for decades. The accumulated wealth has allowed the country to create sovereign wealth funds and acquire assets abroad.
Role in OPEC and global geopolitics
Saudi Arabia's importance in the international energy scene has grown rapidly. The country became a founding member of the Organization of the Petroleum Exporting Countries (OPEC), and has become an active participant in decisions on production quotas and control of global supply.
In addition to its role in the market, Saudi Arabia has gained relevance in international relations, maintaining strategic alliances with importing nations and influencing political decisions related to energy security.
Vision 2030 and economic diversification
The Saudi government's heavy dependence on oil led it to launch the Vision 2016 program in 2030. The plan seeks to diversify the economy by encouraging sectors such as tourism, technology, mining and renewable energy. The goal is to reduce dependence on oil exports and create new sources of revenue.
Among the ongoing projects is the Neom construction, a planned city in the northwest of the country, with a focus on technological innovation. The initiative uses resources from oil to finance the structure of the future metropolis.
Energy transition and new investments
Although oil remains the main source of revenue, Saudi Arabia has begun investing in other energy sources. Solar and wind energy projects are being developed, as well as initiatives aimed at producing hydrogen and using carbon capture technologies.
The stated intention is to adapt the country's economic model to global transformations in the energy sector, maintaining its leadership position while expanding its areas of operation.
The discovery of oil in 1938 was the starting point for Saudi Arabia's economic transformation. From a desert territory with low revenues, the country became one of the richest nations in the world, with a central role in geopolitics and the global energy market. Even with new plans for diversification, oil remains an essential element in sustaining the Saudi economy.
