Saudi Arabia is an Arab dominated Middle East nation founded in 1932 and is run as a kingdom, ruled by the Al Saud family since its founding in 1932, wielding its significant global influence through its administration of the birthplace of the Islamic faith and by virtue of its large oil reserves (Blanchard 2010). The country boasts of its colossus status as an oil producer with a quarter of the world’s proven reserves under its deserts, a factor that has had importance as an oil exporting nation thereby enhancing economic interdependence with the West who are the main consumers (BBC 2016). Saudi Arabia is a founding member of OPEC (Organization of Petroleum Exporting Countries), with Arabic as its main language, a geographical size of 2.24 million sq km (864,869 sq miles), 28.7 million people and using Riyal as its official currency (BBC 2016). The Al Saud dynasty holds a monopoly of political power in Saudi Arabia with King Salman bin Abdulaziz al-Saud having ascended to the throne in January 2015 after the death of his half-brother, King Abdullah been part of the ruling clique of princes likely to continue the main thrusts of Saudi strategic policy, including maintaining the alliance with the United States and working towards energy market stability (BBC 2016).
Exports and Imports
Trading in Saudi Arabia and more so exports and imports have risen in the recent past especially after they joined the world trade organization in 2005 leading to a ranking as one of the economically viable nations at position 13 in World Bank annual “Doing Business” report of 2010 (Economywatch.com 2010). Consequently, it is outright that exports are dominated by mineral fuels, which account for 13% of the world’s mineral fuel exports with crude petroleum (79% of total exports, 16.3% of world crude petroleum exports) and refined petroleum products (12% and 7.1%, respectively) being the largest exports (Saudi Arabia 2016).
The main exports from Saudi Arabia consist of mostly petroleum and petroleum products and the major imports being industrial machinery and equipment, chemicals, automobiles and textiles (Economywatch.com 2010). Other exports include polymers (1.2%) and industrial alcohols (1.4%, accounting for 8.1% of the world’s industrial alcohol exports), with exports being valued at $113 billion, and imports valued at approximately $36 billion, for a trade surplus of $77 billion in 2004 (Saudi Arabia 2016).
Major Trading Partners and Trade
By the year 2004, Saudi Arabia’s leading markets were: the United States which comprised 18.5% of all exports, Japan 15.2%, South Korea 10.1%, and China 5.7% with the leading suppliers being the United States 9.3% of all imports, Germany 6.6%, Japan 6.5%, and the United Kingdom 5.3% (Saudi Arabia 2016).
China is a key partner in Saudi Arabia’s business circles with their business interactions bringing out $12.71 billion in 2009, despite being largely hit by the global economic crisis (Economywatch.com 2010). Additionally, in a fore cast, the Economic Watch had pointed out that dealings between the two nations could raise in exceedingly $60 billion come 2015 given the exports and imports in place (Economywatch.com 2010).
Another important trade partner for Saudi Arabia is India with the countries being reliable partners in both exports and imports. The Economic Watch points out between 2008 and 2009, business between India and Saudi Arabia raised $25.08 billion in trade not related in oil as India’s imports from Saudi Arabia standing at $19.97 billion and exports $5.11 billion (Economywatch.com 2010).
Similarly, Saudi Arabia remained the largest U.S. trading partner by overall value in the Middle East in 2015 according to the U.S. International Trade Administration, which said that Saudi exports to the United States in 2015 were worth more than $22 billion where as U.S. exports to Saudi Arabia were valued at more than $19.7billion an increase of nearly $9billion since 2009 (Blanchard 2010). To a considerable extent, the high value of U.S.-Saudi trade is dictated by U.S. imports of hydrocarbons from Saudi Arabia and U.S. exports of weapons, machinery, and vehicles to Saudi Arabia (Blanchard 2010). However, declines in global oil prices from their early 2014 highs have had a pronounced effect on the value of Saudi exports to the United States since Saudi Arabia remains dependent on oil export revenues for much of its national budget, therefore, low oil prices have been viewed with some mild public and official concern in the kingdom (Blanchard 2010). Additionally, according to the U.S. Energy Information Administration, as of September 2016, Saudi Arabia was the second-largest source of U.S crude oil imports, providing about 1.124million barrels per day (mbd) of the 8.173mbd in gross U.S. crude imports, behind only Canada. As of 2013, oil exports to the United States accounted for roughly 15% of Saudi exports, with East Asia accounting for more than 68%.In 2015, Saudi Arabia produced an average of more than 10 mbd of its estimated 12.5 mbd capacity and had indicated that it may not expand that capacity in light of current trends in international oil markets (Blanchard 2010).
In Conclusion, Saudi Arabia remains an important partner in the trading world especially with its vast endowment in oil making it a key determinant in world oil prices in addition to determining its own budget estimates which is largely dependent on oil exports.