Evolution of the Saudi Arabian Term Paper

This situation, combined with the fact that countries from the former Soviet Union produced less oil, made the Western countries to consider Saudi Arabia their main oil supplier.

Saudi Arabia responded to the increased interest showed by the West by expanding its capacity plan for the oil industry. As a consequence, the largest Saudi Arabian companies in the industry increased their domestic crude oil capacity. These companies also invested in quality, not just in quantity. Although the country's economic relationships with the West significantly intensified, Saudi Arabia improved its regional trade sector by addressing markets like Iran, Central Asia, South Asia, and Kuwait.

However, the country was significantly affected by the Persian Gulf War. As a result of the war, the country's government finances were reduced. Not even the substantial revenues from oil could sustain the cost of the war. The country was forced to borrow money from international organizations and to reduce subventions to government companies.

The price of the oil affects companies as much as it affects individuals. This is because the increase in the price of oil is likely to attract price increases in most categories of products, because of increased transportation costs. The solution to this problem is represented by alternative sources of energy. But their high cost determines individuals to avoid such sources of energy, which means that countries like Saudi Arabia are likely to continue to benefit from their strategic position as important oil suppliers.

Reference list:

1. The Economy (2010). U.S. Library of Congress. Retrieved January 21, 2011 from…