Saudi Arabia, explained
August 17, 2025
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The Kingdom of Saudi Arabia is the largest state on the Arabian Peninsula.
Its territory covers over 2 million square kilometres, larger than France, Italy, Germany, and the UK combined.
However, the majority of this land is desert. Only 2% is suitable for agriculture, and less than 5% is urbanised.
Saudi Arabia stretches from the Red Sea to the Persian Gulf, two important maritime routes linking Asia, Africa and Europe.
Religion
Saudi Arabia hosts Mecca and Medina: the two holiest cities in Islam. This makes it the spiritual centre of the Muslim world.
Between 85-90%of the population are Sunni Muslim.
Islamic law (sharia) and religious conservatism are central in Saudi Arabia, although this has been changing slightly in recent years.
Politics
Saudi Arabia is an absolute monarchy ruled by the House of Saud dynasty since 1932.
The throne is currently held by King Salman with growing authority concentrated in the hands of Crown Prince Mohammed bin Salman (MBS).
Military
In 2023, Saudi Arabia spent 7.1% of its GDPondefence (7th largest share globally).
It is the largest defence spender in the Middle East, and 7th globally.
The Saudi army has fewer soldiers than some of its neighbours’ but is well-equipped with advanced Western weapons.
Between 2020-24, it was the largest recipient of US weapons, at 12%of total US arms exports.
Saudi Arabia hosts around 2,300 American soldiers.
Economy
Saudi Arabia is the world’s 18th largest economy, with a GDP (PPP) of $2.5 trillion.
Its economy’s largest sector is crude oil production.
In 2024, oil accounted for approximately 62% of budget revenues and over 75% of total exports.
Saudi Arabia relies heavily on foreign workers who account for approximately 75% of its labour force.
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Saudi Arabia’s Oil Fortune
Saudi Arabia has long been a key player in the crude oil market, alongside the US and Russia.
Oil was first discovered in the country in 1938 by a US company.
In 1944, the Arabian American Oil Company (Aramco) was established.
By 1976, the Saudi government took full ownership of Aramco, which became Saudi Aramco in the late 1980s.
Saudi Arabia is the world’s largest oil exporter, at $181 billion in 2023.
It holds around 17% of the world’s known oil reserves, including the world’s largest onshore and offshore oil fields.
Saudi Arabia is a founding member of OPEC, created in 1960.
OPEC is an organisation of oil-exporting countries that coordinates production to influence global prices.
Saudi Arabia is the largest producer in OPEC and acts as the group’s leader.
Oil is Saudi Arabia’s most powerful political tool.
Saudi Arabia has the largest spare production capacity (the potential to produce more oil). It uses this position to influence global markets and politics.
By increasing orreducing production, Saudi Arabia pushes the price of oil up or down.
If OPEC joins, the effect is more significant. An even broader group, OPEC+, often joins in too.
Case study: 2020 Saudi-Russia Price War
During the COVID-19 pandemic in 2020, global oil demand fell.
As oil prices were falling, Russia refused to join in on a production cut, as demanded by OPEC+.
It likely hoped to earn more from its oil exports by not cutting production and benefitting from OPEC’s efforts to keep global prices higher.
Saudi Arabia responded by raising production to 12 million barrels per day. It also offered lower prices to Europe and Asia, targeting Russia’s main buyers.
The price war pushed global oil prices to historic lows.
Eventually, Russia agreed to cut production.
Why it matters: the crisis showed how Saudi Arabia can outlast competitors by flooding the market with cheaper oil
The relationship with the US
The partnership dates back to the 1940s.
In exchange for stable and favourable oil supplies, the US guarantees Saudi Arabia’s security.
Saudi Arabia uses its oil revenues to purchase advanced US military technology.
During the Cold War, both countries worked together in anti-communist operations, most notably by funding and arming Afghan mujahideen fighting the Soviet occupation of Afghanistan.
In 1973, relations were tested when Saudi Arabia, together with OPEC, led an oil embargo (refusal to sell) against the US and other countries supporting Israel during the Yom Kippur War.
Despite this, the strategic partnership endured.
In 1990, when Saddam Hussein’s Iraq invaded Kuwait, Saudi Arabia feared the conflict could spread across its borders.
The US led a 650,000-strong coalition force to successfully liberate Kuwait.
After the 2001 terror attacks on New York, the Saudi-US partnership was tested again.
15 of the 19 hijackers wereSaudi nationals, and Osama bin Laden, the leader of al-Qaeda, was a Saudi citizen.
Despite tensions, the US and Saudi Arabia deepened their cooperation on counterterrorism.
In 2018, Saudi journalist Jamal Khashoggi was murdered inside the Saudi consulate in Istanbul.
The killing triggered international outrage and a crisis in US–Saudi relations.
Khashoggi was killed by Saudi nationals, and MBS had likely approved the operation.
The US Congress demanded sanctions and a reassessment of arms sales to Saudi Arabia.
However, President Trump defended the cooperation.
US-Saudi regional cooperation focuses on:
Containing and balancing Iran
Defeating the Houthis in Yemen
Protecting maritime trade routes
The Houthis are an anti-US, Iran-backed Islamist group that governs parts of Yemen and disrupts shipping traffic from Europe to Asia with deadly attacks.
In May 2025, President Trump visited Riyadh, the capital of Saudi Arabia.
Key outcomes:
Saudi Arabia committed $600 billion of investment in the US
$140 billion arms deal signed
Iran is the main geopolitical rival of Saudi Arabia.
The two engage in proxy conflicts by supporting opposing groups across the Middle East.
A proxy war is a conflict where at least one of the countries is using a third country or a non-state actor to indirectly attack its opponent.
Iran-backed groups:
Hezbollah in Lebanon
Hamas in Gaza
Shia militias in Iraq and Syria
Houthis in Yemen
Saudi-backed groups:
Sunni factions in Lebanon
Sunni militants in Iraq and Syria
Government forces in Yemen
Crisis point: in September 2019, drone strikes on Saudi oil facilities resulted in a 50% cut in Saudi oil production.
The Houthis claimed responsibility but evidence pointed to Iran’s involvement.
In 2023, with Chinese support, Saudi Arabia and Iran agreed to restore diplomatic relations.
In May 2025, Iran approached Saudi Arabia and the United Arab Emirates with a proposal to cooperate on uranium enrichment.
Iran’s goal is to relax international concerns about its nuclear program, including by involving neighbouring states as stakeholders or observers.
One month later, the US bombed 3 key nuclear research sites in Iran. The extent of damage is unclear.
MBS has previously said that if Iran develops a nuclear weapon, Saudi Arabia “would have to get one, for security reasons”.
Saudi Arabia has good relations with the other monarchies of the Persian Gulf: Bahrain, Qatar, Kuwait, Oman and the United Arab Emirates (UAE).
In 2015, Saudi Arabia launched a coalition intervention against the Houthis.
Goal: restore the Yemeni government and prevent a pro-Iranian state on Saudi Arabia’s border.
The intervention is ongoing but failed to defeat the Houthis who currently control Yemen’s capital.
In recent years, ceasefire talks intensified, and Saudi Arabia appears willing to stop its involvement.
Russia
Since 2016, Saudi Arabia and Russia have coordinated oil policy through OPEC+.
This cooperation continued after Russia invaded Ukraine in 2022.
Western sanctions on Russia pushed it to look for new export destinations, and Saudi Arabia emerged as one of the main partners.
In 2022, Russian agricultural exports to Saudi Arabia increased by 49% compared to the year before.
Overall trade increased 73%, from $2.2 billion in 2021 to $3.8 billion in 2024.
By June 2025, Saudi Arabia had become the largest importer of Russian fuel oil.
Why? By importing Russian fuel (processed) oil, Saudi Arabia reduces the need to refine its own crude (raw) oil.
Saves more crude oil for export at higher prices
Avoids paying for processing at home
China is Saudi Arabia’s largest trading partner and the largest buyer of Saudi oil.
Saudi Arabia is part of the Belt and Road Initiative.
China invested in several Saudi infrastructure projects, including the Mecca-Medina-Jeddah railway connecting the holy sites of Islam.
Crown Prince Mohammed bin Salman (MBS) is the most powerful figure in Saudi politics.
MBS is the son of King Salman and was appointed Crown Prince in 2017.
In 2022, MBS was appointed Prime Minister by his father.
Traditionally, the title of Prime Minister belonged to the monarch himself. By appointing his son, King Salman transferred large executive powers to MBS. This also supports a strong succession (passing of the throne).
MBS presented an ambitious reform plan named Vision 2030.
Goal: to transform Saudi Arabia into a modernstate with a diversified economy.
Major points include:
Reducing dependence on oil
Expanding women’s rights
Weakening religious fundamentalists
So far, Saudi Arabia is successfully cutting oil dependence as non-oil activitiesmade up50% of the country’s economy in 2023.
Saudi Arabia plans to generate 50% of its electricity from renewable sources by 2030.
MBS is also attempting to rebrand the country as a global luxury destination, promoting tourism and entertainment.
He aimed to draw 100 million visitors annually by 2030. This goal was achieved in 2023 and 2024.
Saudi Arabia is building NEOM, a $500 billion futuristic mega-city on the Red Sea, but the project is facing delays.
Author Simone Chiusa
Editor Anton Kutuzov
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