Home International Relations The United States and Saudi Arabia’s Bilateral Ties

The United States and Saudi Arabia’s Bilateral Ties

The United States of America and the Kingdom of Saudi Arabia have had a relationship since the 1930s and stand today as strongly as ever on issues of national security and economic opportunity. Saudi Arabia stands as one of America’s closest allies and the strongest economic partners in the Middle East. With over 300 joint ventures, American companies are the largest group of investors in Saudi Arabia, creating market access and job opportunities. The two countries also build their relationship through cultural and educational exchanges. 

Both countries share common concerns for oil exports and imports, regional security, and sustainable development. Saudi Arabia tops the list of the largest foreign military sales in American markets, with more than $100 billion spent. Not only this but also the US has supported the Arabian Ministry of Defence and the National Guard along with civil and military development in the region. The core idea behind this relationship is that America provides military protection in exchange for reliable oil supplies from Saudi Arabia and support for American foreign policy operations across the world.

Bilateral Trade Relations

The US is Saudi Arabia’s second-largest trading partner, while the Kingdom is the third-leading source of oil in the US, providing about half a million barrels per day of oil to the American market. Therefore, it is the biggest commodity traded between the two nations. On the other hand, Saudi Arabia is consistently in need of weapons, reinforcements, and arms due to the constant rising tensions in the Middle East.

The exports that top the charts for Saudi Arabia are crude petroleum ($96.1B), refined petroleum ($13B), and ethylene polymers ($10.1B). Its top imports are planes, helicopters, cars, aircraft parts, broadcasting equipment, and packaged medicaments. In 2020, Saudi Arabia decided to reduce oil supplies to the United States in an effort to reduce global oil stockpiles and balance demand and supply. Texas surpassed Maryland as the top US state in terms of trade with Saudi Arabia, with a total increase of 69% and a value of SR 4.1 billion. It also ended up creating a total of 17,721 jobs in 2021 in all these states combined.

Both countries have also signed a “Trade Investment Framework Agreement” and launched their Vision 2030 program, which states their plans to diversify the economy. increased trade and investment with the US and other countries. Both parties discussed options for increasing trade volume and exchanging licenced investment in both countries, particularly in technical fields. Additionally, it also discussed the stimulation of major US value-added companies to be added to the market of the Kingdom, especially those mentioned in the Kingdom’s Vision 2030 and the National Transformation Program 2020. Officials from the United States and Saudi Arabia discussed technical cooperation, consumer protection, examining consumer goods, certificates of conformity, cooperation-related trademark protection, customs, intellectual and cultural property protection, media, the environment, and agricultural cooperation. 

Vision 2030 and its Role in Economic Diversification

Vision 2030 has the potential to strengthen bilateral trade and investment relations between the United States and Saudi Arabia. The aims of this vision are to provide public roles for women, generate more than 450,000 private sector jobs, become a regional hub for logistics, focus on training, create a domestic defence industry, and use private sector funding to replace 40% of the government’s spending. This partnership would deliver unprecedented success in the global energy system, which would be crucial for the steady growth of the economy and create thousands of jobs for both countries with a $43 billion bilateral trade and investment relationship.