Saudi Arabia's economy: Aramco's oil and the plan to outgrow it

How oil came to carry the kingdom

Until the 1930s Saudi Arabia was a subsistence economy that relied on limited farming and the revenue of the pilgrimage. In 1933 the government signed an oil concession with Standard Oil of California, and commercial quantities were found five years later in the Eastern Province. Production reached 500,000 barrels a day by 1949 and 1 million in 1954, pumped by the Arabian American Oil Company, Aramco, and shipped from terminals at Ras Tanura and Ju'aymah on the Gulf.

Control passed to the state in stages: a 20% share in 1972, full nationalisation of the company's assets in 1980, and the creation of Saudi Aramco in 1988 to take over Aramco's responsibilities. Saudi Arabia was a founding member of OPEC in 1960. During the crisis of 1973 the price of oil rose from about $3 a barrel to nearly $12, and Wikipedia gives GDP as about $15 billion in 1973 and almost $184 billion by 1981.

The fall was as steep. The price dropped from about $36 a barrel in 1980 to about $14 by 1986, and Saudi output, close to 10 million barrels a day in 1980 and 1981, fell to about 2 million in 1985. The government ran deficits and drew down its foreign assets. Income per head, which Wikipedia puts at $11,700 at the height of the boom in 1981, was $6,300 in 1998; another estimate it cites gives about $18,000 falling to $7,000 by 2001. Wikipedia notes that since then the oil price, more than productivity or employment, has been the main factor in whether Saudi output grows or shrinks.

What Aramco produces and earns

The government puts proven reserves at about 260 billion barrels. Aramco's own results give the scale of extraction. In 2025 the company produced 12.9 million barrels of oil equivalent a day, against 12.4 million in 2024, of which liquids, crude oil, natural gas liquids and condensate, made up about 10.7 million barrels a day. The crude it sold fetched an average of US$69.2 a barrel, down from US$80.2 in 2024.

For 2025 Aramco reported adjusted net income of US$104.7 billion, operating cash flow of US$136.2 billion and capital investment of US$52.2 billion, and said it was on course to raise sales gas capacity by about 80% over 2021 levels by 2030. It converts its accounts at 3.75 riyals to the dollar, the rate at which the riyal is pegged; the IMF's Executive Board judged in July 2025 that the peg remains appropriate.

The state sold a small part of the company in December 2019. Shares equal to 1.5% of Aramco were listed on the Saudi Exchange, Tadawul, and began trading on 11 December, raising US$25.6 billion. The sale came three months after drone attacks on Aramco facilities in September 2019, which Wikipedia reports sidelined more than half of the kingdom's oil output.

How much of the economy is still oil

The sources disagree on the share, partly because it moves with the price. Wikipedia's economy article gives oil and gas as about 22.3% of GDP and 55% of government revenue in its opening, and elsewhere an older petroleum share of about 87% of budget revenue, 90% of export earnings and 42% of GDP, none of them dated. GASTAT's figures for 2025 put crude petroleum and natural gas extraction at 17.1% of GDP at current prices.

What is clear is how the oil price runs through the growth figures. The IMF's consultation of July 2025 found that OPEC+ production cuts held Saudi oil output at about 9 million barrels a day in 2024, so oil GDP fell 4.4% while non-oil GDP grew 4.5% and the whole economy 2.0%. In 2025, with the cuts being unwound, the pattern reversed.

The IMF projected growth of 3.9% for 2026; Arab News reports that it raised its forecast in January 2026 to 4.5%, while the World Bank expected 4.3%. The current account moved from a surplus of 2.9% of GDP in 2023 to a deficit of 0.5% in 2024, and the central bank's net foreign assets stood at US$415 billion. The government has borrowed to cover the gap: Fitch data cited by Wikipedia show the kingdom went from no dollar debt in May 2016 to US$68 billion in bonds and loans two years later, and the finance ministry's borrowing plan for 2026 was US$58 billion, with public debt expected at 33.9% of GDP.

Taxation has changed less than spending. There is no personal income tax, and one of Vision 2030's stated objectives is to raise revenue from fees "without introducing taxes on income or wealth on citizens". A value-added tax of 5% was introduced in 2018 and raised to 15% from 1 July 2020.

What the Vision programme set out to change

Diversification is an old aim. Every five-year plan since 1970 has called for it, and Wikipedia's verdict is that they did so "with marginal success". The first plans of the 1970s went into infrastructure: in that decade paved highways tripled in length and power generation rose 28-fold. The industrial cities of Jubail on the Gulf and Yanbu on the Red Sea were completed in the 1980s around steel, petrochemicals, fertiliser and refining. A plan for six economic cities, such as King Abdullah Economic City, costed at $60 billion in 2013, failed in Wikipedia's account to attract the people or the investment promised.

Vision 2030, launched on 25 April 2016, is the current version. The government describes it as unfolding in three five-year phases, carried out through Vision Realization Programs, with the Public Investment Fund as a "growth engine". Its published objectives include localising technology, diversifying entertainment and easing access for Umrah visitors, and Arab News reports a target of raising non-oil exports to 50% of non-oil GDP by the end of the decade. The NEOM project includes a 105-mile linear city, The Line, promoted in a video in July 2022.

Assessments differ. The IMF's Executive Board in 2025 commended "impressive structural reforms since 2016" in the business environment and in female labour participation. Wikipedia's economy article states that by 2022 Saudi Arabia had "only modestly reduced its dependence on oil", and GASTAT's 2025 figures still put crude extraction at 17.1% of GDP. Non-oil exports did reach US$25.9 billion in the fourth quarter of 2025, which Arab News reports was 114% above the first quarter of 2017, when the series began.

How the kingdom opened to foreign capital

For most of the oil era foreign money came in on Saudi terms. The Foreign Investment Act of 1979 barred foreign ownership in some sectors and gave priority to businesses wholly or partly owned by Saudis. Rules were relaxed in the mid-1990s for telecommunications, utilities and financial services, and the Foreign Direct Investment Act of 2000 allowed projects run by wholly foreign-owned companies for the first time. The Saudi Arabian General Investment Authority was set up in April 2000 to attract investment, and the kingdom became a full member of the World Trade Organization on 11 December 2005 after twelve years of talks.

The flows have been uneven. UNCTAD reported foreign direct investment of only US$1.4 billion in 2017, down from US$7.5 billion in 2016 and US$12.2 billion in 2012, and Wikipedia attributes the fall to negative intra-company loans and divestments by multinationals. Licences issued to foreign businesses then rose: by 70% over 2018 in the first quarter of 2019, most of them to British and Chinese companies. Since 2016 the state has also used its own capital through the Public Investment Fund, which Vision 2030 casts as a growth engine; its stakes abroad include 80% of the Premier League club Newcastle United, taken as part of a consortium in October 2021.

Housing shows how slowly some of this reaches households. Wikipedia records that 50% of Saudi citizens owned their home in 2017, up from 30% in 2011, and that the state housing fund, which provided 81% of housing loans, had an eighteen-year waiting list before new mortgage schemes were announced in August 2018.

Who works in the Saudi economy

The labour market has two halves. In 2008 roughly two-thirds of workers in the kingdom were foreigners, and about 90% in the private sector, while most Saudis in work were employed by the state. The 2022 census counted 13.4 million non-Saudis, 41.6% of residents. Foreign workers are employed under the kafala sponsorship system, which human rights groups say is linked to slavery, and Freedom House describes working conditions for the large expatriate workforce as often exploitative.

Governments since 2000 have pursued Saudisation, reserving jobs or quotas for citizens. After 2017 higher fees on expatriate workers led more than 677,000 foreigners to leave, while unemployment among Saudis rose to 12.9%, a record at the time. The IMF reported in 2025 that unemployment among Saudi nationals had since reached a record low, with youth and female unemployment halved over four years. The average monthly private-sector salary for Saudis was SR9,600 in 2023, up 45% from SR6,600 in 2018.

What else the kingdom makes and grows

Beyond crude oil, the economy runs on what is made from it: refined products and petrochemicals from Jubail and Yanbu, much of it within Aramco, whose 2025 accounts include the chemicals company SABIC. The state mining company Maaden works the kingdom's smaller deposits of gold and phosphate, among other minerals. In 2022 the American carmaker Lucid began building a plant in Jeddah with capacity for 150,000 electric vehicles. GASTAT's 2025 data show trade, restaurants and hotels growing 6.2%, finance and business services 6.1%, and utilities 6%.

Farming is small and limited by water. Most of it is in the south-west, where rainfall averages 400 millimetres a year, and the date palm is grown across the country. Wheat irrigated with desalinated water was phased out by 2016. Herds counted in 2009 came to 7.4 million sheep, 4.2 million goats, half a million camels and a quarter of a million cattle.

How pilgrims and tourists feed the economy

The pilgrimage paid the kingdom's way before oil, and it still brings in money. GASTAT counted 1,673,230 pilgrims at the Hajj of 2025, 1,506,576 of them from abroad. Wikipedia, without a date, puts the Hajj at about 40,000 temporary jobs and US$2 to 3 billion in revenue a year,

Leisure tourism is newer. Tourist visas were first issued on 27 September 2019, to visitors from 49 countries, and the Ministry of Tourism counted 116 million domestic and international visitors in 2024, 29.7 million of them from abroad, and a preliminary 122 million in 2025, when it put tourism spending at SR300 billion. Its target for 2030 is 150 million visitors a year, 70 million of them international. Saudi Arabia: travel covers what those visitors come for.