This graph shows GDP growth in Saudi Arabia since 1972. The economy’s rapid growth began with the 1973 oil crisis, when the Arab-led Organisation of Petroleum-Exporting Countries (of which Saudi Arabia is a leading member) announced an oil embargo in response to the US’s decision to supply the Israeli military during the Yom Kippur war. This resulted in a sharp rise in petroleum revenues, and meant that Saudi saw GDP per capita soar to 1,858 per cent during the 1970s.
However, higher oil prices meant reduced consumption and the development of more oil fields around the world. This is what led to the mid-1980s dip visible on this graph. A worldwide oil glut introduced some uncertainty to Saudi Arabia for the first time in a decade. Oil production, which was at nearly ten million barrels a day in 1980-81 dropped to about two million barrels a day in 1985. Average quarterly growth reached a record low of -11 per cent in December 1982.
Suddenly, budgetary deficits became an issue. Responding to financial pressures, Saudi accepted a production quota. Since then, its oil policy has been governed by the desire to maintain market and quota shares.