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Research report7 min read

Saudi Arabia: A Kingdom Changing Within the Oil State

A country profile on Saudi Arabia through monarchy, Vision 2030, ties with the United States, China, and Iran, and the tension between rights and labor.

The Riyadh skyline at dusk
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1. Executive Summary

Saudi Arabia is less a kingdom that lives on oil than a kingdom that keeps rule alive with oil while rebuilding its governing base. 出典: Saudi government system overview and Vision 2030 overview support this reading.

The crown, religious authority, the security state, Vision 2030, and external balancing all sit inside the same governing machine, so domestic reform and foreign policy cannot be separated. 出典: Vision 2030 official reports and Saudi Shura Council support this reading.

The Salman-MBS center tries to modernize the state while keeping political participation tightly managed. 出典: Saudi government system overview and Freedom House, Saudi Arabia 2026 support this reading.

For Japan, Saudi Arabia is not just a crude supplier and shipping node; it is also a key point for reading Gulf order and Saudi-U.S., Saudi-China, and Saudi-Iran relations. 出典: IMF, Saudi Arabia Article IV 2026 and Vision 2030 official reports support this reading.

Figure 1 Saudi royal power, economic change and political control
  1. Royal leadership Vision 2030

    Economic transition

  2. Vision 2030 Non-oil growth

    Investment and industry

  3. Royal leadership Security and political control

    Domestic rule

  4. Royal leadership Management of religious authority

    Reshaping authority

  5. Royal leadership External balancing

    Diplomatic choices

Distinguish Vision 2030's non-oil growth from security and religious control and external balancing.

2. Historical and State Formation

Modern Saudi Arabia was shaped by the 1932 founding, its alliance with religious authority, the nationalization of oil revenue, the 1979 Grand Mosque seizure, and the 1990-91 Gulf War. 出典: Saudi history overview and Britannica, Saudi Arabia support this reading.

1979 matters because the Iranian Revolution and a domestic religious shock happened at the same time, which sharpened Saudi Arabia’s sense of security and social control. 出典: Britannica, Saudi Arabia and CIA World Factbook, Saudi Arabia support this reading.

Since the late 2010s, the main turning points have been MBS’s consolidation of power, the 2018 Khashoggi killing, the 2023 restoration of relations with Iran, and the renewed emphasis on Palestinian diplomacy after 2025. 出典: Saudi Arabia and Iran joint statement and Saudi-led two-state initiative support this reading.

Figure 2 Saudi state formation and policy shifts
  1. 1932

    Founding

  2. 1979

    Grand Mosque seizure

  3. 1990

    Gulf War

  4. 2015

    MBS rises

  5. 2023

    Rapprochement with Iran

  6. 2025

    Two-state diplomacy returns

The chronology covers state formation, the 1979 crisis, the Gulf War, MBS, Iran relations and Palestinian diplomacy.

3. Political System and Power Structure

Legally, the kingdom is a monarchy, and its basic law says the Qur’an and the Sunna are the basis of governance. 出典: Saudi government system overview supports this reading.

There is no national party competition or competitive election at the top level, and the members of the Shura Council are appointed by the king. 出典: Saudi Shura Council and Freedom House, Saudi Arabia 2026 support this reading.

As a result, legislation, oversight, the budget, security, and religious administration all converge on royal consolidation even when they appear institutionally separate. 出典: Saudi government system overview and Saudi Shura Council support this reading.

In practice, the kingdom is driven by the king, the crown prince and prime minister, the ministries of interior, defense, and foreign affairs, the PIF, and the religious establishment. 出典: PIF annual report 2024 and Saudi government system overview support this reading.

Main actorRoleWhat to watch
King SalmanFinal arbiter of the systemSuccession and legitimacy
Crown Prince MBSPolicy engineReform, control, external bargaining
PIFState capital vehicleMegaprojects and industrial policy
Shura CouncilAppointed advisory bodyHow far institutional change can go

4. Foreign Relations

The U.S. relationship rests on security cooperation that dates back to the 1945 Quincy meeting. 出典: U.S. relations with Saudi Arabia supports this reading.

But in recent years the relationship has become more conditional around deterrence against Iran, Gaza ceasefire diplomacy, oil policy, and human rights. 出典: U.S. relations with Saudi Arabia and Freedom House, Saudi Arabia 2026 support this reading.

The China relationship is deep at three layers: oil and investment, industrial cooperation, and diplomatic mediation. 出典: China-Saudi joint statement and Vision 2030 annual report 2024 support this reading.

The 2023 Saudi-Iran rapprochement brokered in Beijing showed that Saudi Arabia can use China not as a security substitute, but as a mediator for tension management. 出典: Saudi Arabia and Iran joint statement supports this reading.

Relations with Iran have improved, but the regional competition itself has not disappeared. 出典: Saudi Arabia and Iran joint statement and U.S. relations with Saudi Arabia support this reading.

In Yemen, Saudi Arabia is looking for an exit from a long war, but border security and Red Sea instability remain. 出典: UN Yemen briefings and Reuters, Middle East coverage support this reading.

Normalization with Israel will not move forward, as Riyadh has made clear, without recognition of an independent Palestinian state. 出典: Saudi-led two-state initiative and Reuters, Middle East coverage support this reading.

CounterpartMain logicWhat to verify
United StatesSecurity anchorDefense ties, human rights, oil policy
ChinaInvestment and mediationEnergy, industry, technology cooperation
IranTension management and rivalryDurability of dialogue and proxy activity
YemenBorder and sea-lane securityTruce, missiles, Red Sea safety
Israel / PalestineConditional normalizationWhether two-state diplomacy becomes concrete

5. Society, Economy, and Everyday Life

Vision 2030 is not just branding around de-oilization; it is an official redistribution plan that bundles state investment, tourism, logistics, entertainment, and women’s employment. 出典: Vision 2030 overview and Vision 2030 annual report 2024 support this reading.

The 2024 Vision 2030 report says international tourism rose, women’s labor-force participation increased, and non-oil exports expanded. 出典: Vision 2030 annual report 2024 supports this reading.

Still, oil remains the base of the economy, and the IMF sees strong non-oil growth as requiring structural reform and demand management. 出典: IMF, Saudi Arabia Article IV 2026 supports this reading.

The population reached 35.3 million in mid-2024, and non-Saudis were about 15.7 million, or about 44 percent. 出典: GASTAT, Population Estimates 2024 supports this reading.

That population mix offers the advantages of youth and urbanization, but it also imports the frictions of migrant labor and social control. 出典: GASTAT, Population Estimates 2024 and ILO Saudi Arabia materials support this reading.

Freedom House still classifies Saudi Arabia as Not Free in 2026, while HRW and Amnesty continue to flag restrictions on speech, labor exploitation, passport confiscation, and freedom of movement. 出典: Freedom House, Saudi Arabia 2026, Human Rights Watch, World Report 2026, and Amnesty International, Saudi Arabia support this reading.

Women’s public participation has increased, but that does not mean political freedom has expanded in parallel. 出典: Vision 2030 annual report 2024 and Freedom House, Saudi Arabia 2026 support this reading.

6. What It Means for Japan and East Asia

For Japan, the most important thing is to treat Saudi Arabia both as a crude supplier and as a maker of Gulf political order. 出典: U.S. relations with Saudi Arabia and IMF, Saudi Arabia Article IV 2026 support this reading.

When the Strait of Hormuz, the Red Sea, Yemen, Iran, or Israel shifts, the shock spreads not only to energy prices but also to insurance, shipping, construction, and investment projects. 出典: UN Yemen briefings and Reuters, Middle East coverage support this reading.

On the investment side, PIF-led megaprojects are attractive, but contract enforcement, labor, sanctions, and reputational risk all have to be assessed at once. 出典: PIF annual report 2024 and Human Rights Watch, World Report 2026 support this reading.

7. Monitoring Points and Limits

The key monitoring points are oil policy, defense cooperation with the United States, economic dependence on China, tension with Iran, and regional reordering after the Gaza ceasefire debate. 出典: IMF, Saudi Arabia Article IV 2026 and U.S. relations with Saudi Arabia support this reading.

This country cannot be read through a single line because it pushes liberalization and control, modernization and conservatism, regional stability and outward assertiveness at the same time. 出典: Vision 2030 overview and Freedom House, Saudi Arabia 2026 support this reading.

So in news reading, it is better to track power distribution, cash allocation, and diplomatic priorities than the performance of reform rhetoric. 出典: Vision 2030 annual report 2024 supports this reading.

On the basis of public information, Saudi Arabia looks less like a state leaving oil behind than a state redesigning governance with oil money. 出典: Vision 2030 overview and IMF, Saudi Arabia Article IV 2026 support this reading.

References