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Saudi Arabia is the centerpiece in the global oil system largely due to
its unrivaled resources. The Kingdom holds nearly 260 billion barrels,
or roughly one-fourth of the world's proven reserves, and possibly as
much as four times this amount in recoverable resources.
Adding to its importance are its very low production costs of around
$1-2 per barrel, as well as the ease of finding and producing new
supplies within its borders. It is the largest supplier of oil to the
world as a whole, providing around 10 million barrels per day to the
global market and meeting close to one-fifth of the United States' daily
need for crude imports. Moreover, it can vary this output relatively
easily. Saudi officials say that Saudi production could rise by 50% or
even double within the next few decades with enough total reserves to
remain a stable resource for half a century or more. Taken together,
these factors make Saudi Arabia the single most important determinant of
the global oil supply-demand balance. The Kingdom's location in the
politically unstable Gulf region is a key concern for its major
customers, especially the United States.
Much of the country's
oil resources and infrastructure are located in the east, close to the
conflict prone Persian Gulf, necessitating passage through the Straits
of Hormuz, a two mile wide shipping bottleneck at the Gulf's outlet to
the sea. Of the eight largest oil and gas fields that contain more than
half of Saudi oil reserves, the two biggest Ghawar (the world's largest
oil field) and Safaniya (the world's largest offshore oilfield) are near
or in the Persian Gulf itself. Two-thirds of Saudi Arabia's crude oil
is exported from the Gulf via the Abqaiq processing facility. Saudi
Arabia's two primary oil export terminals are located at Ras Tanura (the
world's largest offshore oil transfer facility) and Ras al-Ju'aymah, both in the Gulf, as well. Another terminal lies in Yanbu, a
port city on the Red Sea. In an effort to rely less on the Gulf route
through the Straits, the Saudis have constructed the East-West Crude Oil
Pipeline (Petroline) to transport crude nearly 750 miles from the Ghawar
oil field to Yanbu. However, this route is not as efficient as the
Straits of Hormuz, adding five days shipping time to Asia. Thus far,
economic concerns have kept the pipeline operating at only half
capacity. The Abqaiq-Yanbu natural gas liquids pipeline, which runs parallel to the Petroline, serves Yanbu's petrochemical plants.
Two additional pipleines: the Trans-Arabian Pipeline to Lebanon and the 48-inch Iraqi Pipeline have been closed indefinitely due to regional conflicts.
Sources: U.S. Energy Information Administration
(EIA); British Petroleum; BBC News Online; CIA World Factbook; U.S.
Department of State
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Interactive Map: Middle
East- Learn more about the politics, population and history of
Middle East countries.
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