How Saudi Arabia Got Rich | Saudi Arabia Richest Country
How Saudi Arabia got rich? There are many people in this world wondering how Saudi Arabia got rich. In this article we are trying to provide you good information about How Saudi Arabia got rich. We have arranged the information in this post to make you understand it easily. We hope that you can understand it well. Please check the information below.
How Saudi Arabia got rich
Saudi Arabia land is actually almost all covered by sand. The weather is so extreme that you cannot plant many kinds of fruits there. Even it is really hard to rise livestock. So, how Saudi Arabia got rich?
Saudi Arabia was in a bad economy until the 1930s. During the 1973 oil crisis Saudi started to grow rapidly and peaked around 1980. In the mid 1980s the oil price felt from a high of US$40 per barrel to around US$5, and the country had a massive overseas debt.From 2002 to mid-2008 oil prices got better, letting the government to post budget surpluses, and boost spending.
Saudi Arabia was an economy based on very low agriculture resources by a population that was largely nomadic and very poor until the discovery of oil in the 1930s. To lift up the price of oil, Saudi Arabia and several other major exporters (Venezuela, Iraq, Iran and Kuwait) founded the Organisation of the Petroleum Exporting Countries (OPEC), to control production. The first five-year “Development Plan” was begun in 1970, and these have resumed sequentially with 2015 being the first year of the tenth plan.
During the 1973 oil crisis OPEC production cuts lifted up the price of petroleum from $3 per barrel to nearly $12. Saudi became one of the fastest rising economies in the world. It enjoyed a significant surplus in its overall trade with other countries; imports improved rapidly; and ample government revenues were presented for development, defense, and aid to other Arab and Islamic countries. Another price push around 1980 during the Iran–Iraq War led Saudi Arabia to what has (so far) been its economic height (in terms of per capita income).
But higher oil prices allowed to development of more oil fields around the world and decreased global consumption. The result, starting in the mid-1980s, was a worldwide oil glut, with the oil price going down from a high of US$40 per barrel to a low point of around US$5. This brought in an element of planning insecurity for the first time in a decade. Saudi oil production, which had risen to almost 10 million barrels (1,600,000 m3) per day during 1980–81, went down to about 2 million barrels per day (320,000 m3/d) in 1985. Budgetary deficits increased, and the government took its foreign assets. Reacting to financial pressures, Saudi Arabia quit its role as the “swing producer” within OPEC in the summer of 1985 and agreed a production quota. Since then, Saudi oil policy has been guided by a desire to control market and quota shares.
In June 1993, Saudi Aramco took in the state marketing and refining company (SAMAREC), becoming the world’s largest fully incorporated oil company. Most Saudi oil exports transported by tanker from oil terminals at Ras Tanura and Ju’aymah in the Persian Gulf. The remaining oil exports are moved via the east-west pipeline across the kingdom to the Red Sea port of Yanbu. A major new gas initiative guarantee to bring important investment by U.S. and European oil companies to build up non-associated gas fields in three separate parts of Saudi Arabia. Following final technical agreements with dispensation awardees in December 2001, development should start in 2002.
Nevertheless, starting in late 1997, Saudi Arabia again encountered the challenge of low oil prices. Due to a mixtures of factors—the East Asian economic crises, a warm winter in the West created by El Niño, and a rise in non-OPEC oil production—demand for oil slowed and brought oil prices down by more than one-third.
Saudi Arabia was a most important player in controlling the successful 1999 campaign of OPEC and other oil-producing countries to lift the price of oil to its highest level since the (Persian) Gulf War by controlling production and supply of petroleum. That same year, Saudi Arabia built up the Supreme Economic Council to formulate and better coordinate economic development policies in order to speed up institutional and industrial reform.
So, basically, this country is moved by oil. Oil has become the heart of Saudi Arabia since long time ago. Recently, since the price of oil went down, and the big cost war in Yemen and Syria, Saudi Arabia started to raise taxes and bills. Saudi Arabia is also a country that invests big money to other countries such as China and Indonesia for business.
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