Sample Essay on History of Oil in Saudi Arabia

The 50/50” Agreement was a precedent suggested by the Saudi government, after realizing that the US, which was part of Arab-American Oil Company (Aramco), was benefiting more from oil than Saudi Arabia. The agreement allowed for equal sharing of income among Middle East countries while paving way for the naturalization of petroleum reserves. The agreement reiterated on adhering to generally recognized standards in oil field practices.  The signed document also allowed the Jiddah radio agreement to take full force.

The Trans-Arabian Pipeline (Tapline) Company was a vital industrial player in the market of petroleum. The company has supported the economic advancement of Lebanon, in addition to facilitating the America-Middle East relationship. The pipeline was initially planned to traverse Saudi Arabia oil fields towards the port of Haifa, but the conflict between Britain and Israel led the company to look for an alternative route, to evade the Palestine region. Eventually, the pipeline ran through Jordan and Syria, before ending at Sidon in Lebanon.

The Organization of the Petroleum Exporting Countries (OPEC) was established in 1960 as an intergovernmental organization, consisting of Iraq, Iran, Saudi Arabia, Kuwait, and Venezuela (Folsom and Boulware 344). The five countries convened in Bagdad to devise tactics that could influence the world’s oil market. Initially, the influence did not work until 1982, when OPEC introduced quotas to its members, which helped in attaining the desired supply, thus making OPEC a price-setting cartel. However, financial crisis, misunderstanding among members, and a huge supply of oils from the US have lately affected OPEC, but OPEC members have vowed to maintain their levels of production as they fight for the market share in the global oil market.

 

Work Cited

Folsom, W D, and Rick Boulware. Encyclopedia of American Business. New York, NY: Facts On File, 2004. Internet resource.