Oil in Saudi Arabia

OIL IN SAUDI ARABIA
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Instructor
5th November 2015
Oil is an important engine of every economy. It is a source of energy needed for industrial activities, transport, power generation and many more. The oil industry plays a very vital role in the global markets and the resultant global economies. The production of oil has dynamics that influence the mining, prices and sustainability. One of the countries that produce oil is Saudi Arabia. Analysis is given to the changes taking place in their production from exports and the changes in prices that have occurred to the sector and its influence on the economy.
Saudi Arabia is the world’s largest hub for oil. Of all the known global oil reserves, it accounts for one quarter. The production is in terms of eight million barrels daily which is to be increased in future (Royal Embassy of Saudi Arabia, 2015). This oil has had impacts on their economy. It is the major source of revenue for the economy. It runs their local economy and is exported to other countries in large amounts. Literally the entire Saudi Arabian economy is based on its oil industry. From the prospecting, to the exploration, production, refinery and exportation, the industry is a major source of employment for a large percentage of Saudis. This exchange from local trade and exports is the major form of business for the citizens.
The country is not so much blessed with rain, with virtually the entire land lying within the Arabian Desert. The hot and dry condition offers harsh conditions for any other economic activity, with the sandstorms being an eye and obstacle to agriculture; their dry country cannot sustain agricultural production as it does in other countries. Oil therefore takes the largest share of the economic activity. Investors are also attracted to this sector as some buy oil wells. Their massive input in terms of infrastructure and just sheer investment in the oil sector makes the nation’s stock market very viable and active. These factors of trade and investments have led to increase in job opportunities in the country.
Oil prices in Saudi and the globe; have been facing a fall in the last few years. The reason for this is a decline in demand for oil. There are many reasons why this is the case, mostly grounded on politics. First is the increased oil production of oil by Russia. The country started producing a lot of oil especially after the country’s annexation of Crimea and invasion of Ukraine. The increased supply has also been ...