Home to an estimated 15% of the world’s proven oil reserves and the single-largest economy in MENA, Saudi Arabia is a key player not only in the region, but globally as well. Since its establishment in September 1932, the Kingdom has poured its considerable financial resources into a series of large-scale economic development, diversification and modernisation initiatives. In the last few years, Saudi Arabia has attracted international attention for the momentum of its socio-economic transformation taking place under the auspices of the Vision 2030 development blueprint.


Saudi Arabia is the largest country in the Middle East and the 13th-largest nation in the world, with an area of approximately 2.15m sq km that accounts for 80% of the Arabian Peninsula. The Kingdom is covered by a series of interconnected deserts and scrubland, the largest of these being the 650,000-sq-km Rub Al Khali (Empty Quarter) in the south, which is the biggest continuous sand desert in the world. The country contains numerous wadis, or dry riverbeds, but no natural lakes, rivers or streams. According to the World Bank, less than 1% of the country’s total land area is considered well suited for agricultural activities.

Saudi Arabia shares land borders with Jordan, Iraq and Kuwait in the north, Qatar and the UAE in the east, and Oman and Yemen in the south. It is also connected to Bahrain – off the east coast – by the King Fahd Causeway, a 25-km road bridge. The Kingdom’s west coast runs along the Red Sea.


Saudi Arabia is hot and extremely arid year-round, like much of the rest of the Gulf, and does not have clearly defined seasons. May to September are typically regarded as the summer months, during which temperatures can be as high as 45-55°C. The heat is felt the most in the interior, an area also characterised by low humidity rates. Temperatures cool in the winter months of November to February to average 19-25°C. Winter temperatures can drop below freezing in central and northern Saudi Arabia, especially at night, with occasional snowstorms in the north. During the seasonal transition period from February to May, violent sandstorms sometimes occur. Average annual precipitation is around 8 cm, almost all of which falls between December and March, when tropical winds can cause monsoons in the south and south-west.


The population was largely nomadic until the early 1960s, when rapid economic development from newly struck oil revenue prompted a process of urbanisation, and as of 2011 more than 95% of the country’s citizens were settled. Based on estimates from the General Authority for Statistics (GaStat), the total population stood at 33.4m in 2018, an increase from 32.6m the previous year. This followed growth of 333% between 1975 and 2009, when the figure reached 25m, representing one of the fastest-growth rates in the world. The World Bank forecasts the population to reach 34.7m by 2020 and 39.5m by 2030.

Per GaStat data, the Kingdom’s population density stood at about 17 people per sq km in 2018, though the figure is substantially higher in cities and urban areas. As of 2014 Saudi Arabia’s largest city is the capital, Riyadh, which is home to around 6m people. This is followed by Jeddah, with 3.98m inhabitants; Makkah (1.92m); Medina (1.34m); Al Ahsa (1.19m); Taif (1.11m); and Dammam (1.03m).


In 2018 GaStat estimated that Saudi nationals accounted for 62.2% of the population, with non-nationals making up the remaining 37.8%. The expatriate population has grown, constituting 33% of the total in 2015 and 37% in 2017. The large foreign population comprises people from all over the world, including nationals from the Philippines, India, Pakistan, Afghanistan and Indonesia, among other Asian countries. The Kingdom is home to a substantial Western population as well, including residents from the UK, the US, the EU and Canada. The great majority of the expatriate population lives in Riyadh and other major urban centres. Saudi Arabia’s population is young, with 49% of nationals under the age of 25 as of mid-2017. Combined with rapid population growth, this is expected to drive economic development and innovation, but also present numerous challenges in the years ahead.


The official language of the Kingdom is Arabic, of which there are two predominant dialects: Nejdi and Hejazi Arabic. The large expatriate population means that many other languages are also spoken, including Urdu, Malay and Tagalog. English is widely spoken by Western expatriates and in places of business, and most road signs are written in both Arabic and English.


As the birthplace of the Prophet Muhammad and the home of Makkah and Medina, Saudi Arabia is an Islamic country, with the king holding the title of Custodian of the Two Holy Mosques. The majority of Saudis are Sunni Muslim, while a minority – mostly living in the Eastern Province – are Shia. The Wahhabi ideology, a strict branch of Sunni Islam espoused by the 18th-century imam Muhammad ibn Abd Al Wahhab, has also played an important role in society since the first Saudi state was created.

Religion is central to social, political and economic life in Saudi Arabia, and under the Basic Law of Saudi Arabia, which was issued by King Fahd bin Abdulaziz Al Saud in 1992, the Quran serves as the basis for all the Kingdom’s laws, rules and regulations. Therefore, Islam informs and defines all areas of life, including the legal system, public behaviour, marriage relations, culture and the calendar.

All Saudis are required to abide by sharia law, which mandates daily public prayer, the separation of unrelated men and women, and the paying of zakat, or religious charity. As a part of the annual Hajj and Umrah pilgrimages, which are considered to be religious obligations and cornerstones of Islamic life, Saudi Arabia attracts approximately 8.5m Muslim pilgrims from around the world each year.


Despite the fact that the vast majority of the Arabian Peninsula is covered by inhospitable desert, nomadic tribes have called the area home for thousands of years. The earliest recorded archaeological evidence discovered on the peninsula dates back to the third millennium BCE, when the Dilmun civilisation occupied an area that includes the modern-day states of Bahrain, Qatar and Oman, as well as parts of Iran and Saudi Arabia’s Eastern Province. In the first millennium BCE, the ancient Thamud tribe moved from southern Arabia to what is now the Medina region, where they occupied a series of towns until the middle of the first millennium CE.

The history of the Arabian Peninsula from 600 CE onward was largely characterised by the rise of Islam, which began with the birth of the Prophet Muhammad in Makkah around 570 CE. By the time of the Prophet Muhammad’s death in 632 CE, the majority of the Gulf had been united under Islam. By 800 CE, as a result of rapid expansion by the early Muslim caliphs and other leaders, Islam had become the predominant religion over a wide geographical area, spanning from what is now Spain and Portugal in the west to Central Asia in the east.

Early States

With political power concentrated in Damascus and Cairo during the medieval period, a handful of nomadic and semi-nomadic groups came to control the Arabian Peninsula. Among the most powerful of these groups were the Hashemites, or Banu Hashim, a clan within the larger Quraish tribe that is descended directly from the Prophet Muhammad, who came to control much of the eastern Hejaz region of Arabia during the second millennium CE.

The Al Saud family, which today rules Saudi Arabia, has held intermittent control of the Nejd and other parts of central and eastern Arabia since the mid1700s. In 1744 Muhammad ibn Saud, then-head of the Al Saud family, established an alliance with the imam Al Wahhab with the aim of unifying the Arabian Peninsula under the banner of Islam. The first Saudi state, which was based in Diriyah, controlled a large area until 1818, when the Ottomans recaptured it during the Ottoman-Saudi war.

During the second Saudi state, which was formed in the wake of the war and based out of Riyadh, the Al Saud family ruled over a substantial area in central Arabia from the early 1820s until 1891, when it succumbed to tribal infighting. In the wake of this defeat, the head of the family at the time, Abdul Rahman bin Faisal Al Saud, fled to Kuwait with his family, including his son Abdulaziz Al Saud. The latter is the founder of the third Saudi state, which is synonymous with modern-day Saudi Arabia.

New Beginning

In 1902, when he was about 26 years old, Abdulaziz Al Saud returned to Riyadh and conquered the city with a small group of men. Over the next few years the young ruler worked to consolidate his control over most of the Nejd region, where the Al Saud family remained popular among the local inhabitants. By 1912 Abdulaziz had gained control of most of central and eastern Arabia, and over the following two decades he continued to expand his reach across the peninsula, negotiating with local rulers and colonial powers when possible, and resorting to force when necessary. In September 1932 Abdulaziz announced the formation of the Kingdom of Saudi Arabia, naming himself king.

Six years after the modern state was formed, US company Standard Oil discovered oil in commercial quantities in the Eastern Province city of Dammam. The find, which eventually revealed the second-largest reserves of crude oil in the world, changed the young country forever. By the mid-1950s oil exports accounted for the majority of the state’s income, and Saudi Arabia embarked on a series of large-scale, government-led economic development projects funded by this new revenue stream.


According to the IMF’s October 2018 “World Economic Outlook”, Saudi Arabia is categorised as an emerging market economy, a grouping that includes countries such as China, Turkey, Russia and India. The World Bank, for its part, classifies the Kingdom as a high-income, non-OECD country. According to the latest data from the World Bank, Saudi Arabia ranked as the 19th-largest economy in 2017, with GDP of $686.7bn, down from $756.4bn in 2014 due to a decline in oil revenue. The Kingdom also regularly participates in G20 meetings and will host the G20 in Riyadh in 2020.

Hydrocarbons income has traditionally accounted for the vast majority of state revenue, however in April 2016 the government launched Vision 2030, a bold economic diversification plan with the central aim of transitioning the economy away from its dependency on oil. The plan calls for a multitude of developments, including greater localisation of key sectors such as defence and value-added industrial production; an expansion of religious pilgrimage; and privatisation of public services in key areas such as transport, utilities, education and health (see Economy chapter). Announced in June 2016, the National Transformation Programme (NTP) 2020 provides targets and plans as a roadmap for the medium-term objectives of Vision 2030. While questions have been raised regarding the manner in which the plans will be implemented, both the international and local business communities expect there will be ample opportunity for increased investment in the private sector.

In December 2016 the government approved the Fiscal Balance Programme (FBP), a five-year financial plan to eliminate Saudi Arabia’s deficit by 2020, which was later set back to 2023. The FBP focuses on various areas, including social welfare reform, scrutiny of government expenditure in the wake of low oil prices, introduction of new fiscal measures such as expatriate levies and value-added tax, and private sector growth. In 2017 Saudi Arabia also redesigned the governance structure of Vision 2030, announcing that its implementation would be detailed by 12 Vision Realisation Programmes (VRPs) with a 2020 horizon, two of them being the FBP and a revised version of the NTP, referred to as NTP 2.0.

On October 25, 2017 a third VRP was released, the Public Investment Fund (PIF) Programme, which outlines a number of initiatives to be undertaken by Saudi Arabia’s sovereign wealth fund to 2020. In line with the objectives of Vision 2030, the capital raised for the PIF through the initial public offering of state-owned oil giant Saudi Aramco is to be channelled into new economic ventures, supporting the growth of the private and non-oil sectors. However, plans to float up to 5% of the corporation in 2018 – which would have generated as much as $100bn – have been postponed to 2021 to focus on the proposed acquisition of the PIF’s 70% stake in petrochemicals manufacturer Saudi Arabia Basic Industries Corporation (SABIC) by Saudi Aramco, also estimated to be worth around $100bn.


The government has worked hard to open up the Kingdom to foreign direct investment (FDI) in recent years. Saudi Arabia is ranked 92nd out of 190 nations in the World Bank’s “Doing Business 2019” report, and its reputation for political stability has historically made it a popular destination for FDI in the MENA region. However, the Kingdom saw its FDI level drop to $1.4bn in 2017 from $7.5bn in 2016 and $8bn in 2014, before the oil price slump.

Energy Resources

Saudi Arabia is one of the most important oil producers in the world, boasting 15.7% of total crude reserves at the end of 2017, according to BP’s “Statistical Review of World Energy 2018” report. Additionally, it is home to 4.2% of global natural gas reserves. Oil reserves at the end of 2017 were estimated by BP at 266.2bn barrels, although the discovery of two new oil fields in 2017, Sakab and Zumul, put Saudi Aramco’s estimates of total reserves higher at 332.9bn barrels. Saudi Arabia has an oil production capacity of 12.5m barrels per day (bpd), though it produced roughly 9.9m bpd in 2017, according to the 2018 budget.

The energy industry is dominated by state-owned Saudi Aramco, which controls nearly all of the oil and gas reserves in the country and is estimated by many to be the largest oil company in the world. Saudi Arabia is one of the five founding members of the Organisation of the Petroleum Exporting Countries (OPEC) and was traditionally considered the global swing producer. When oil prices began to drop after June 2014 the Kingdom initially maintained high production levels in order to protect its share of the international market, but in January 2017 Saudi Arabia headed an historic agreement between OPEC and non-OPEC members to curb global oil production in an effort to stabilise prices.


Riyadh, the capital and largest city in the country, is located in the Nejd region, a rocky plateau that covers a large swathe of land in central Saudi Arabia. Jeddah, the second-largest city and major urban centre in the west, is located on the Red Sea coast and is bordered by the Sarawat Mountains to the east. Jeddah is also the largest city in the province of Makkah, which includes the holy cities of Makkah and Medina. At the administrative level, the Kingdom is organised into 13 provinces, including the Eastern Province – which is home to the bulk of Saudi Arabia’s oil reserves – Riyadh Province, Makkah Province and Medina Province. Each province has its own provincial capital. The provinces are further divided into between three and 20 governorates, with a total of 118 throughout the country. Each of the governorates are also divided into sub-governorates.


Saudi Arabia is a monarchy and the royal family is the Al Saud, specifically the direct descendants of King Abdulaziz, the country’s founder. The current monarch, King Salman bin Abdulaziz Al Saud, assumed the throne following the passing of his half-brother, King Abdullah bin Abdulaziz Al Saud, in January 2015. Since then King Salman has abolished a number of government councils and replaced them with two major councils, the Council for Political and Security Affairs and the Council for Economic and Development Affairs, both of which are chaired by Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud.

In 2015 King Salman named Prince Mohammed bin Naif Al Saud as the crown prince, but he was relieved of the title in June 2017 and replaced by the then-deputy crown prince, Mohammed bin Salman, the son of King Salman bin Abdulaziz Al Saud. The current crown prince is widely seen as a moderniser, seeking to meet the needs and aspirations of the population through his leadership.


The top governmental body in the Kingdom is the Council of Ministers, or the Cabinet, which is led by the ruler and consists of 30 royally appointed ministers serving four-year terms. The government’s relationship with, and its responsibilities towards, its citizens is codified by the Basic Law, which was passed by King Fahd in 1992.

The Majlis Ash-Shura, or Consultative Council, has an advisory role in the government and is made up of 150 members, all of whom are appointed by the king. However, the organisation has limited powers and cannot pass or enforce laws. The body broadly serves as a forum for policy debates, and it can interpret existing laws and propose new legislation to be passed by the ruler. In addition, the council advises the king on a variety of issues, including the annual budget and long-term economic development plans. The Consultative Council also has the power to call ministers in for questioning.

Around 70% of the members of the current council hold PhDs, many of which were granted from US and UK universities and women make up one-fifth of its total membership. While the governmental body continues to be primarily an advisory group, it has gained a substantial number of new powers over the past decade. For example, it was recently given a mandate to participate in the Kingdom’s complex budgeting process, which was considered to be a significant increase in responsibility.


In 2006 a law formalising the succession process in the Kingdom was announced. Following the death of the reigning monarch, a committee composed of male heirs of King Abdulaziz is convened to officially name the crown prince as the new king. This law helped facilitate a smooth transition in 2015, with the accession of then-Crown Prince Salman to the throne.

Power has traditionally been held by King Abdulaziz’s sons, with accession passing from brother to brother. The appointment of Prince Mohammed bin Salman as crown prince overturned decades of royal custom, as succession from father to son had only taken place once before in Saudi Arabia’s history.