Because Saudi Arabia holds some 25% of the world's oil reserves, it is inevitable that the Kingdom should play a pivotal role in the affairs of the Organization of Petroleum Exporting Countries. It is also inevitable that the role which the Kingdom discharges should attract the continuing attention of foreign governments and the world's media.
It may be helpful to begin a review of the present and future status of oil within the Saudi Arabian economy by setting the Kingdom's oil (production and reserves) into a wider historical and geographical context.
It is fair to say that the attitude of the Kingdom of Saudi Arabia to the exploitation of its own oil reserves and to the oil market in general has, from the earliest years, shown a considerable degree of sophistication. From 1974 (1393/94 AH), the Kingdom of Saudi Arabia has continuously used its influence to try to impose some degree of stability on the oil market. It has consistently shown an understanding of the economic needs of consuming nations, as well as those of its fellow producers.
It is the Kingdom's view that, in the exploitation of a finite resource as precious as oil, international and global considerations, as well as national needs, should be taken into account. It is damaging to the world economy to have major rises or falls in the price of such an essential source of energy. This fact alone suggests that rather than presenting the producer/consumer relationship as one of conflict, it would be more constructive to recognize it as one of interdependence. It must also be true that, as the world's reserves of oil diminish, and the value of that diminishing resource increases, agreement between the producers and consumers on how best to manage this economic process would seem to be highly desirable.
What will happen to the oil market in the next few years is difficult to predict. So many factors are involved. How quickly will the world's recoverable reserves of oil be depleted? How far and how quickly will alternative sources of energy be employed to replace oil in some of its applications? What impact will environmental considerations have upon national and international energy policies? What scientific advances will be made which might radically alter the total energy resources of the planet? Will nuclear fusion become a practical, as distinct from a theoretical, source of virtually limitless energy? And what of the international political environment within which the oil market game has always been played?
As the years pass and as oil reserves diminish, it seems most likely that the oil price will rise. If this process is managed sensibly, the rise should be gradual, causing minimum economic disruption. If it is left to the market, there are likely to be sudden and substantial rises in price which the consuming economies will no doubt find difficult to absorb - as difficult to absorb as the producing economies found the falls in price of the 1980s and 1990s.
In terms of the economy of the Kingdom of Saudi Arabia, oil will continue to play a key role. The Kingdom's development plans have used the oil revenues to diversify the Saudi Arabian economy, expanding the non-oil industrial sector and the agricultural sector. It remains, nevertheless, true that oil will continue to represent the major sector of the economy. Latest official estimates of Saudi Arabian oil reserves (1998 - 1418 AH) stand at 262,000 million barrels; proven gas reserves are currently estimated at 5.8 trillion cubic meters. Even these latest estimates are considered conservative by many who have suggested that reserves of oil could be as high as 315,000 million barrels of oil and 7.4 trillion cubic meters of gas. It is therefore inevitable that in the coming decades the Kingdom of Saudi Arabia will continue to derive most of its income from the black gold that lies within its territory. It is also inevitable that the Kingdom's role in the politics and economics of the Middle East and, indeed, on the wider international stage, will grow in importance as the smaller oil reserves of other countries become more difficult and more expensive to exploit or, finally, are exhausted.