Oil: Dammam No. 7 and the American alliance
American geologists strike oil in commercial quantities in 1938, and within a generation oil turns one of the world's poorest countries into one of the richest and binds it to the United States.
- The Prize: The Epic Quest for Oil, Money, and Power — Daniel Yergin, Simon & Schuster (1991)
- America's Kingdom: Mythmaking on the Saudi Oil Frontier — Robert Vitalis, Stanford University Press (2007)
- A History of Saudi Arabia (2nd edition) — Madawi Al-Rasheed, Cambridge University Press (2010)
- Inside the Kingdom: Kings, Clerics, Modernists, Terrorists, and the Struggle for Saudi Arabia — Robert Lacey, Viking (2009)
In the Depression years Abdulaziz was desperate for money. In 1933 he granted an oil concession in the Eastern Province to Standard Oil of California (Socal). After years of dry wells, Dammam No. 7, near today’s Dhahran, struck oil in commercial quantities in early March 1938. Its operating company, renamed the Arabian American Oil Company (Aramco) in 1944, built a self-contained American town at Dhahran, with Saudi workers living in separate camps, a divide historians such as Robert Vitalis have shown was enforced like Jim Crow.
- The Prize: The Epic Quest for Oil, Money, and Power — Daniel Yergin, Simon & Schuster (1991)
- America's Kingdom: Mythmaking on the Saudi Oil Frontier — Robert Vitalis, Stanford University Press (2007)
Saudi workers did not accept that order quietly. In 1953 and again in 1956 Aramco’s Saudi employees struck for better pay and conditions and against discrimination; the strikes were broken, leaders were jailed or deported, and strikes were banned. Yet Aramco also trained a generation of Saudi engineers and managers, and its towns in the Eastern Province became, for many Saudis, a first window on the modern world.
- America's Kingdom: Mythmaking on the Saudi Oil Frontier — Robert Vitalis, Stanford University Press (2007)
- A History of Saudi Arabia (2nd edition) — Madawi Al-Rasheed, Cambridge University Press (2010)
The American bargain
In February 1945 Abdulaziz met President Franklin Roosevelt aboard USS Quincy in the Great Bitter Lake of the Suez Canal, the start of the enduring bargain: American security guarantees for Saudi oil. Revenues grew enormously after the war, and by the early 1950s Aramco was paying the government half its profits.
- The Prize: The Epic Quest for Oil, Money, and Power — Daniel Yergin, Simon & Schuster (1991)
- Inside the Kingdom: Kings, Clerics, Modernists, Terrorists, and the Struggle for Saudi Arabia — Robert Lacey, Viking (2009)
From tents to cities
Money came faster than institutions. King Saud (1953–64) spent lavishly and nearly bankrupted the state, and his brother Faisal took over its finances, then the throne in 1964. Faisal used oil money to build ministries, roads, schools for boys and girls, hospitals and universities, while insisting that modernisation would stay within an Islamic framework.
- A History of Saudi Arabia (2nd edition) — Madawi Al-Rasheed, Cambridge University Press (2010)
- Inside the Kingdom: Kings, Clerics, Modernists, Terrorists, and the Struggle for Saudi Arabia — Robert Lacey, Viking (2009)
- The Prize: The Epic Quest for Oil, Money, and Power — Daniel Yergin, Simon & Schuster (1991)
- A History of Saudi Arabia (2nd edition) — Madawi Al-Rasheed, Cambridge University Press (2010)
- Inside the Kingdom: Kings, Clerics, Modernists, Terrorists, and the Struggle for Saudi Arabia — Robert Lacey, Viking (2009)
A rentier society
The boom of the 1970s remade the country within a few years. Bedouin settled in cities, villages emptied, and a welfare state offered free education and health care, interest-free housing loans and public-sector jobs to citizens, without income tax. Millions of foreign workers came to build and run it, from Egypt, Yemen and Palestine at first and later mostly from South and Southeast Asia. Political scientists call this a “rentier” bargain: the state distributes oil wealth, and citizens accept that politics belongs to the royal family. It is the model that Vision 2030 is now trying, cautiously, to rewrite.
- A History of Saudi Arabia (2nd edition) — Madawi Al-Rasheed, Cambridge University Press (2010)
- Saudi Arabia in Transition: Insights on Social, Political, Economic and Religious Change — Bernard Haykel, Thomas Hegghammer and Stéphane Lacroix (eds.), Cambridge University Press (2015)
- Saudi Census 2022: Results — General Authority for Statistics (GASTAT), Saudi Arabia (2023)
Why it matters today
Oil built everything modern Saudis know: cities, highways, free schools and hospitals, generous public-sector jobs, and the huge foreign workforce. It also created the welfare-for-loyalty social contract and a dependence on a single commodity that Vision 2030 is trying to end. Aramco remains a source of national pride.