EIA: Country Analysis Brief: Saudi Arabia - October 2017 - eng (pdf)

Saudi Arabia is the world's second-largest holder of proved oil reserves, ranking second only to Venezuela, holding roughly 16% of total reserves. In 2016, Saudi Arabia was the largest exporter of total petroleum liquids (crude oil and petroleum products), with exports mostly destined to Asian and European markets. During that same year, Saudi Arabia was the world's second-largest petroleum liquids producer behind the United States and was the world's second-largest crude oil and lease condensate producer behind Russia. During the first half of 2017, Saudi Arabia has maintained this position, despite lower production than in the previous year.

Saudi Arabia's economy remains heavily dependent on petroleum exports, which accounted for nearly 75% of total Saudi export value in 2016.[2] According to the International Monetary Fund (IMF), about 60% of Saudi government's revenues are oil-based, and the real GDP growth rate fell significantly in 2016, as a result of the slowdown in oil-driven growth that year.[3] Saudi Arabia's oil revenues have fallen dramatically as crude oil prices have decreased since mid-2014. EIA estimates that Saudi Arabia's net oil export revenues totaled $133 billion in 2016, compared with $159 billion (in 2016 dollars) in 2015 when Saudi Arabia boosted production and exports to record highs. Despite the increase in output, Saudi Arabia's net oil revenues in 2015 saw dramatic decrease compared with 2014, when the country was estimated to have earned $301 billion (in 2016 dollar).

In addition to continued investment in maintaining its crude oil production capacity, Saudi Arabia has also invested considerable resources to develop its natural gas, refining, petrochemicals, and electric power industries. The country's natural gas and electric power industries, in particular, are geared to meet increasing domestic demand. Investments in refining and petrochemical industries aim to improve Saudi Arabia's ability to compete internationally in these sectors.

Saudi Arabia's oil and natural gas operations are dominated by Saudi Aramco, the national oil and gas company, which is the world's second-largest oil company in terms of production (behind Russia's Rosneft). Saudi Arabia's Ministry of Petroleum and Mineral Resources and the Supreme Council for Petroleum and Minerals oversee the oil and natural gas sector and Saudi Aramco.

In 2016, Saudi Arabia announced that it will undertake a national transformation called Vision 2030, encompassing both cultural, governance, and economic aspects of Saudi society. On the economic front, Vision 2030 plans to make the kingdom less dependent on income from oil production by broadening the economic base. The plan outlines far-reaching reforms of the energy sector and includes the partial privatization of state-owned Saudi Aramco, planned for the second half of 2018. Income from Saudi Aramco's initial public offering (IPO) would be used to help finance the economic transition.

Saudi Arabia is located near two of the world's busiest chokepoints, and most of its crude oil and petroleum liquid exports travel through them. The Strait of Hormuz, which connects the Persian Gulf with the Gulf of Oman and the Arabian Sea, is the world's most important chokepoint. The oil flow of 17 million barrels per day (b/d) in 2015 through this strait accounts for about 30% of all seaborne-traded crude oil and other liquids during the year. In 2016, total flows through the Strait of Hormuz increased to a record high of 18.5 million b/d. This strait is an important route for the Persian Gulf countries for oil and liquefied natural gas exports.

Another regional chokepoint, Bab el Mandeb, links the Gulf of Aden and the Red Sea. This waterway is a strategic link between the Mediterranean Sea and the Indian Ocean. An estimated 4.8 million b/d of crude oil and refined petroleum products flowed through this waterway in 2016 toward Europe, the United States, and Asia.