Oil Discovered in Saudi Arabia

In March 1938, Dammam Well No. 7 struck oil in commercial quantities in Saudi Arabia's Eastern Province. After years of costly and discouraging drilling, the find proved that the kingdom sat atop one of the largest petroleum reserves on Earth. It would reshape the Saudi state, the global energy economy, and the politics of the Middle East for the rest of the century.

The background lay in the poverty of the young kingdom. Abdulaziz ibn Saud had unified much of the Arabian Peninsula by 1932, but his state depended on modest revenues from pilgrims visiting Mecca and Medina, and the Great Depression cut deeply into them. Hoping that minerals or water might lie beneath the desert, he granted a concession in 1933 to Standard Oil of California, known as Socal. Its subsidiary, later called the California Arabian Standard Oil Company, began exploring the following year. Geologists had reason for optimism, since oil had been found in nearby Bahrain in 1932, but the first wells in Saudi Arabia yielded little.

Dammam Well No. 7, drilled near the Dammam Dome, was the turning point. Its early output was modest, but when the well was drilled deeper into a lower formation, it produced oil at a much higher rate. The company's American geologists and drillers, working alongside many Saudi laborers, had finally located a rich reservoir. Exports began in 1939, and a ceremony that year marked the first tanker loading at Ras Tanura. Later exploration revealed far larger fields, including Abqaiq and, after the Second World War, the enormous Ghawar field, generally regarded as the largest conventional oil field in the world.

World War II slowed development, but production expanded rapidly afterward. The partnership evolved into the Arabian American Oil Company, or Aramco, and in 1950 Saudi Arabia secured an arrangement giving it roughly half of the profits. Over the following decades the kingdom moved toward greater control, and historians generally describe Aramco as fully Saudi-owned by the 1980s. Oil revenue funded roads, cities, schools, and the growth of a large state bureaucracy.

The discovery also tied Saudi Arabia closely to the wider world. It underpinned a lasting relationship with the United States, and in 1960 Saudi Arabia became a founding member of OPEC. The 1973 oil embargo showed how petroleum could serve as a diplomatic weapon. Today the legacy is mixed: oil brought rapid modernization and global influence, but it also left the economy heavily dependent on a single resource, a concern behind recent efforts at diversification.