Edward Trimnell's Online Guide to the Middle East
Saudi Oil
When anyone thinks of Saudi Arabia, one of the first things that comes to mind is oil. But this wasn’t always the case.
In the 1930s, the kingdom of Saudi Arabia was a desperately poor country. The nation’s income was limited to revenues from hajj pilgrims (visiting the sacred sites of Mecca and Medina) and a small volume of agricultural exports (mostly dates).
The neighboring country of Persia (Iran) was then the Middle East’s foremost oil producer. Persian oil production was controlled by a British company, the Anglo-Persian Oil Company (APOC). The House of Saud was vaguely interested in investigating the possibility of oil existing in Saudi Arabia, but the prospects weren’t very promising. British oil interests had drilled for oil in Saudi Arabia during the early 20th century; they soon abandoned the effort, concluding that there was no oil in the country.
In 1932, the Standard Oil Company of California (Socal, later renamed Chevron) struck oil in the tiny island nation of Bahrain. This prompted Socal to try to succeed where the British had failed in Saudi Arabia. (Bahrain lies off the Saudi coast.) Socal purchased drilling rights from the Saudi government in 1933. The company then formed Aramco, a wholly owned subsidiary, to manage oil exploration activities in Saudi Arabia.
The first six wells that Aramco drilled yielded little or no oil. But the seventh well, called Damman No. 7, made all the company’s previous efforts worthwhile. On March 3, 1938, Damman No. 7 began gushing oil at the rate of 2,000 ~ 3,000 barrels per day. The well is yielding oil, almost seventy years later.
Saudi Arabia has more proven oil reserves than any other country. This fact is reflected in the Saudi economy: 75% of all economic activity in the kingdom has some direct connection to oil. (And most of the remaining 25% has some indirect connection.)