The desert kingdom owes its importance not only to its vast oil wealth – it is the world’s largest petroleum exporter – but also to its religious significance. The country is the birthplace of the Prophet Muhammad and the cradle of Islam.
But in recent years, conflicts outside its borders and calls for political reform from within have increasingly challenged the country’s stability. Meanwhile, its oil-dependent economy remains extremely vulnerable to market shocks and price changes.
Although people have settled in the area for more than 5000 years, the modern state covering most of the Arabian peninsula has its roots in the eighteenth century.
Around 1750, a tribal ruler in the central region of Najd, Muhammad bin Saud, joined forces with an influential religious leader, Muhammad Abd al-Wahhab.
Bin Saud agreed to adopt and promote al-Wahhab’s austere and literalist interpretation of Islam in return for the latter’s stamp of religious approval.
Today’s monarchy still receives much of its legitimacy from a commitment to this purist approach, (which can be considered part of the Salafist movement).
The Saud family saw its fortunes rise and fall over the next 150 years as heads of the tribe clashed with Egypt, the Ottoman Empire, and other Arabian clans. The family was even expelled at the end of the nineteenth century and exiled briefly in Kuwait.
Then in 1902, the young Abd al-Aziz al-Saud (known in the West as Ibn Saud) dramatically rode into Riyadh, with a few dozen horsemen and recaptured the ancestral Saudi capital and its surrounding area.
Hoping to avoid the fate of his ancestors, Abd al-Aziz sought to consolidate Saudi dominance over the territory's tribes, through military conquest, political marriages and the protection of foreign powers (initially the British).
By 1932, most of the peninsula was unified under his control and Abd al-Aziz crowned himself king.
Oil was discovered in Saudi Arabia in the late 1930s. A joint venture with an American oil company led to the creation of Arabia American Oil Company or Aramco.
Saudi Arabia started by owning 52% of the company. The Saudi share increased gradually until 1976 when the Riyadh government owned the firm entirely.
Today, Saudi Arabia has the world’s largest petroleum reserves (26% of the known total) and produces roughly 8.5 million barrels per day.
Crown Prince Abd Allah faces
internal and global challenges
Production grew steadily in the decades after the Second World War. But the kingdom only began to enjoy major oil wealth after it and other Arab oil-producers started raising prices in the early 1970s and Saudi Arabia found new, vast petroleum reserves.
After the 1973 Arab-Israeli war and the Arab oil boycott of the US and the Netherlands (over their support of Israel), soaring petrol prices sent oil revenues rocketing.
Large numbers of immigrants came to support the flourishing economy while native Saudis led heavily-subsidised lives, enjoying free healthcare, free education and no taxes.
But Saudi Arabia suffered sharp drops in its oil revenues as prices fluctuated and declined in the 1980s and 1990s. Attempts to diversify the oil-reliant economy largely failed: the petroleum sector still accounts for about 75% of budget revenues and 90% of export earnings.
The slowing economy, together with high birth rates in recent decades and continuing dependence on foreign labour have resulted in rising unemployment among young Saudis in particular. Up to 20% of Saudis - some dissidents say more - are jobless.
Government and politics
The constitution is framed according to Sharia (Islamic law). A Basic Law that details the government's rights and responsibilities was introduced in 1993.
The legal system is similarly based on Islamic law, though several secular codes have also been introduced. Commercial disputes are handled by special committees.
1932 Abd al-Aziz declares himself king
1938 Oil discovered in kingdom
1953 Abdul Aziz dies, succeeded by son Saud
1964 King Saud abdicates in favour of half-brother Faisal, who stresses economic development
1975 King Faisal killed by nephew, succeeded by half-brother Khalid. Kingdom grows richer
1982 Khalid dies; Fahd, another son of kingdom’s founder, becomes king
1990-91 King Fahd joins US-led coalition and encourages Arabs to help expel Iraq from Kuwait
1995 Fahd suffers a stroke. By late 1997, Crown Prince Abd Allah is running the government
2003 Amid increasing crackdown on suspected extremists, Riyadh bombings kill 34 people in May
The large Saudi royal family has kept a tight rein on the administration.
Virtually all key posts are occupied by one of the hundreds of Saudi princes. Other senior officials are appointed.
There is no elected legislative assembly. Instead, the king is advised by a consultative council or shura of 90 members and a chairman appointed by the monarch to serve for four years at a time.
There are no political parties or official opposition. But the struggling economy has fuelled popular dissatisfaction with the US-backed regime and fed demands for political reform and greater democracy, mainly from political dissidents, often based abroad.
The 9/11 attacks on America and the 2003 US-led invasion of Iraq have placed fresh pressures on the kingdom.
Many in the US have increasingly criticised their Saudi ally’s relationship with certain Middle Eastern armed organisations.
Conversely, many religious Saudis feel the regime has betrayed its Islamic roots by allying with a country that supports Israel and attacks or helps suppress Muslim societies.