Saudi Arabia's Oil Dependency Issues and Foreign Investment Options (Case Study Sample)
The task was about a case study on Reviving Saudi’s Foreign Investment.source..
Reviving Saudi’s Foreign Investment
Investments entail various resources spent with an assumed future benefit. Such resources may take the form of time, energy, or money, which are systematically allocated within a particular timeframe. Foreign investments are arguably a solution that most countries seek to foster development and economic growth. Principal amongst Saudi Arabia’s components of its vision 2030 is the inception and actualization of sustainable investment portfolios through the national industrial development and logistics program ("Saudi Vision 2030" n.p.). This report will look into the various issues surrounding Saudi’s oil dependency and the foreign investment options applicable to counter such reliance. The scope of this report is Saudi Arabia’s oil exploration in the recent past and sustainable alternatives that will fuel the country’s economic growth in the long run.
Saudi Arabia’s Oil Dependency Issues
Saudi Arabia is estimably a one-fifth global oil provider with several reserves located in the region’s sea and land. Oil remains to be the kingdom’s primary economic activity since its discovery in the early and mid-20th century (An et al. 1024). Figure 1 below shows the estimated monthly oil production in Saudi Arabia.
Figure SEQ Figure \* ARABIC 1. Monthly oil production in Saudi Arabia (“U.S. Energy Information Administration”)
While the government has embarked on various alternatives to foster the economy, Saudi is still entirely dependent on oil production. The dependency, however, creates a vulnerability to the country especially concerning the future and the vision 2030 agendas (Foley 130). The primary concern regarding this dependency is sustainability. Oil dependency can only offer a solution in the short run due to several issues on oil production (Sarant 6).
Oil Price Collapse
The global oil market is yet to encounter a breakdown, with signs of upheavals already apparent in oil exporting giants such as Saudi Arabia. Oil price collapse was indeed the aftermath of several market changes in the oil industry (Aloui et al. 941). The recent production of unconventional oil in the United States, for instance, led to flooding of oil, which resulted in a sharp decrease in prices. Also, the emerging Asian economic power centres such as China intensified the decline in oil prices. Although Saudi Arabia as the leader of the OPEC (Organization of the Petroleum Exporting Countries) took substantive measures to stabilize the oil industry, prices are still undoing an indeterminable market fluctuation (Aloui et al. 950).
As the largest oil exporting country in the OPEC, Saudi Arabia is a great
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