Saudi Arabia's Oil Industry and Vision 2030 Reforms
Saudi Arabia supplies oil to many countries around the world. The key recipients include the United States of America, China, Japan, and South Korea.
In May 2016, the King renamed the Ministry of Petroleum to the Ministry of Energy, Industry, and Mineral Resources and appointed Khalid Al-Falih, then Chairman of Saudi Aramco's Board of Directors, as its head.
Many analysts linked these changes to the "Vision 2030" economic reform program, whose primary goal is to increase non-oil revenues. The program aims for non-oil exports to account for half of the country's GDP by the year 2030.
However, depending on the global market situation, Saudi Arabia — as has historically been the case — adjusts its oil production capacity either upward or downward.
Thus, at the end of January 2025, Saudi Aramco announced that it had received a directive from the Ministry of Energy to maintain its maximum production capacity at 12 million barrels per day. Prior to this, Saudi Aramco had planned to increase its oil production capacity to 13 million barrels per day by 2027.
Historical and Evolving Saudi-US Oil Relations
When it comes to international relations, one cannot overlook the long-standing partnership between Saudi Arabia and the United States.
The history of Saudi Arabia's oil relations with the United States is rich and dates back to the very beginning of the Kingdom's oil industry. As mentioned earlier, it was the American company Standard Oil of California (Socal) that first received the King's permission to explore and develop oil fields in Saudi Arabia. Since then, the relationship between the two countries has experienced periods of both warmth and tension, depending on the global political climate.
On June 8, 1974, at Blair House—just across the street from the White House—U.S. Secretary of State Henry Kissinger and Prince Fahd bin Abdulaziz Al Saud, Second Deputy Prime Minister of Saudi Arabia and half-brother of King Faisal, signed an agreement that would later have a profound impact on the global oil market and, as a result, the economies of many countries. Under this agreement, Saudi Arabia committed to investing the revenues from oil sales into U.S. Treasury securities in exchange for security guarantees. Shortly thereafter, Saudi Arabia shifted to conducting all oil transactions with its buyer countries in U.S. dollars, effectively pegging oil to the dollar worldwide and giving rise to the concept of the "petrodollar."
"WASHINGTON, June 8. Today, the United States and Saudi Arabia signed a broad military and economic agreement following a meeting that, according to both parties, 'heralded an era of increasingly close cooperation,'" wrote The New York Times at the time. "U.S. officials, commenting on the first such agreement between the United States and an Arab nation, expressed hope that the new accord would encourage Saudi Arabia to increase oil production and serve as a model for economic cooperation between Washington and other Arab countries."
Recent Developments and Shifts in the Saudi-US Energy Partnership
Over the past few decades, relations between Saudi Arabia and the United States have significantly deteriorated.
Currently, the administration of President Trump has expressed its intention to urge Saudi Arabia and OPEC to lower oil prices, arguing that high oil prices contribute to the continuation of the conflict in Ukraine.
The Kingdom has also shifted its policy regarding the petrodollar, moving away from exporting oil exclusively in U.S. dollars.
Expanding Energy Partnerships: China and the Petroyuan
It is known, for instance, that transactions with China are conducted partly in U.S. dollars and partly in Chinese yuan.
On September 9, 2024, in an interview with the South China Morning Post, Saudi Arabia's Minister of Industry and Mineral Resources, Bandar Al-Khorayef, stated that the Kingdom is open to considering any new economic instruments, including the use of petroyuan for transactions. He also emphasized the importance of separating politics from trade.
The Minister noted: "Our policy is to maintain a balanced exchange rate between the Saudi riyal and the U.S. dollar." "This gives us a great opportunity to plan and compete. However, more importantly, it provides our investors, who intend to invest in our country, with the ability to hedge their currency risks."
Al-Khorayef also emphasized that the Kingdom is interested in attracting investments from China in sectors such as metallurgy, pharmaceuticals, renewable energy, robotics, smart city technologies, and electric vehicle manufacturing.
In 2024, Saudi Arabia became the second-largest oil supplier to China.
International Mining and Strategic Global Cooperation
A major global event for the international community was the 4th International Mining Conference.
On January 14, 2025, Riyadh, the capital of Saudi Arabia, hosted the 4th International Mining Ministers' Meeting. Representatives from 89 countries, including 16 G20 member states, along with 50 official international and non-governmental organizations, commodity associations, and leading figures in the global mining industry attended the event.
The main topic of the meeting was strengthening international cooperation in the production of strategic minerals, reviewing the vast resources of the largest mining region encompassing Africa, Western and Central Asia, and exchanging ideas and experiences.
During the meeting, the Minister of Industry and Mineral Resources of Saudi Arabia signed memorandums of understanding and cooperation agreements with authorized representatives of six countries: the United Kingdom of Great Britain (UK) and Northern Ireland, the French Republic (France), the Republic of Djibouti, the Hashemite Kingdom of Jordan, and the Republic of Zambia.
This important step strengthens international partnerships and develops the Kingdom's mining sector, ensuring sustainable industry growth and transforming it into a key driver of economic and social progress at both regional and international levels.
Evolution of Saudi-Russian Energy Relations
As for Russia, relations between Saudi Arabia and the Russian Federation have significantly improved since the collapse of the USSR and are currently characterized by a friendly nature. Although Russia is not a member of OPEC, as one of the world's leading oil-producing nations, it maintains close cooperation with the organization. This collaboration includes consultations, conferences, roundtables, high-level expert meetings, seminars, joint reports, exhibitions, and more.
Bilateral Agreements and Growing Cooperation
On November 20, 1994, an Agreement on Cooperation in the Field of Oil and Gas was signed in Moscow between the Government of the Russian Federation and the Government of the Kingdom of Saudi Arabia. Aiming to strengthen the friendly ties between the two countries and to develop bilateral partnerships in the oil and gas sector, the parties outlined key areas for enhancing mutual cooperation, along with the structure and procedures for such collaboration.
This agreement has significantly facilitated cooperation between the two countries in ensuring the stability of the global oil market.
Since then, representatives from Saudi Arabia and Russia have met regularly, including at the highest levels.
For example, on October 3, 2018, Russian Minister of Energy- Alexander Novak held another meeting with Saudi Minister of Energy, Industry, and Mineral Resources Khalid Al-Falih—marking their 11th meeting that year.
"We are witnessing a steadily growing interest from Russian companies in establishing closer ties with Saudi partners. This is particularly important given the vital role our countries play on both regional and international stages, especially in the energy sector," Alexander Novak said at the time. He also noted that major Russian oil and gas companies are actively involved in the development of oil fields in Saudi Arabia.
Currently, Saudi Arabia and the Russian Federation are reliable partners not only in regulating the stability of the global oil market and exploring alternative energy sources, but also in other areas—attracting a growing number of investors and making Saudi Arabia an increasingly appealing destination for Russian business interests. In recent years, the visa process for entering Saudi Arabia—particularly for business visas—has been significantly simplified, along with the procedures for obtaining residency permits for foreign investors seeking to establish a business in the Kingdom.
Business Environment and Future Outlook
In 2019, Saudi Arabia launched the Premium Residency Program, also known as the "Saudi Green Card". The program targets highly skilled professionals, entrepreneurs, talented individuals, and investors seeking to live in the Kingdom, promoting economic growth and fostering cultural exchange. The program targets exceptional individuals who can contribute to the development of local opportunities and the sharing of expertise.
Dear readers, in the third part of our article, we will share insights into Saudi Arabia's current projects related to the extraction, efficient use, and conservation of the Kingdom's natural resources. Stay tuned and follow our future updates.
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Saudi Arabia's Oil Industry And Foreign Policy
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