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March 3, 1938: Oil in Saudi Arabia

Oil
The discovery of oil has made Saudi Arabia made of the world's richest, most important nations.

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(CNN) -- Before 1938, Saudi Arabia was known primarily for two things: its vast deserts and as the home of two of Islam's holiest sites.

A California-based company's discovery of a commercially viable source of petroleum in Dhahran that year, after four years of searching, completely altered geopolitics and the nation's global influence and economy.

This find, 30 years after prospectors discovered commercial quantities of oil in Iran and nine years after it was found in Iraq, would make Saudi Arabia one of the world's richest and most significant economic powers.

start quoteOil is like a wild animal. Whoever captures it has it.end quote
-- J. Paul Getty
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Saudi Arabia was forever transformed when prospectors found oil in 1938
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Members of the Saudi royal family, having granted prospect rights to the Standard Oil Co. of California in the early 1930s, became heavily involved in the petroleum industry. In 1980, the royal family finally took over the company -- renamed the Arabian American Oil Co., or Aramco, in 1944.

According to the Saudi government, crude oil production increased by an average of 19 percent a year from 1945 through 1974, reaching 8.2 million barrels a day that year.

In the early 1990s, prospectors found gas and oil sources in previously unexplored areas, assuring Saudi Arabia's role as a major petroleum player for the foreseeable future. Today, the Saudi Embassy in London says, the Middle East nation has 260.1 billion barrels in oil reserves.

The area's vast oil resources have made the world sit up and take notice. Despite concerns about civil rights abuses in Saudi Arabia, Washington has maintained close ties with the nation.

Some experts claim this abundance of oil played into United States and its allies' decision to wage the 1991 Persian Gulf War and challenge Iraqi leader Saddam Hussein in subsequent years.


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