Saudi Arabia: The Foundation of the Petroleum Empire Is No Longer Solid | Earth Knowledge Zone

(Image source: Wikipedia @ US Navy) ▼ In the 1960s, the Organization of the Petroleum Exporting Countries (OPEC) was founded in Baghdad, Iraq. Its founding members were Iraq, Iran, Kuwait, Saudi Arabia, and Venezuela. These countries began uniting to speak with one voice internationally, striving to strengthen their collective influence over their own petroleum sectors. During this period, Aramco’s crude oil production surged dramatically; the company relocated its headquarters to Saudi Arabia, and the Saudi government appointed two representatives to Aramco’s board—marking the first step toward gaining control over the company. OPEC’s original members were the world’s dominant holders of proven oil reserves. Subsequently, other Middle Eastern countries and major global oil producers joined OPEC as well. Its monopolistic position remained initially robust. (Data from 2018) (Image @ Zheng Ling Ze Jun) ▼ In 1973, Egypt, Syria, and eleven other nations launched the "Ramadan War" against Israel—known historically as the Fourth Middle East War. In response to the U.S. Congress approving $2.2 billion in massive military aid to Israel, Middle Eastern countries imposed an oil embargo on the United States, triggering a sharp spike in global oil prices and the outbreak of the First Oil Crisis. U.S. gas stations, facing acute supply shortages, closed down during the 1973 oil embargo. (Image: Wiki @ David Falconer) ▼ During this crisis, Aramco’s oil output rose counter-cyclically to 300 million tons per year. Leveraging the volatile international situation, Aramco successfully raised oil prices, reaping enormous profits—and enabling the Saudi government to claim a substantial share. In 1973, the Saudi government acquired a 25% stake in Aramco; by 1974, its share had increased to 60%, significantly enhancing its decision-making authority. OPEC emerged, and oil prices soared. Yet the United States still needed to import ever-greater volumes of oil. (Image source: Wikipedia @ David Moe RockyMtnGuy) ▼ In 1978, the Iranian Revolution erupted, halting Iranian oil exports for 60 days. Then, in 1980, the Iran–Iraq War broke out, completely suspending oil production in both countries—causing another sharp surge in global oil prices. Saudi Arabia once again quietly profited handsomely, and that same year acquired full ownership of Aramco. Saudi Arabia indeed rode the tailwinds of several crises. (Image @ Zheng Ling Ze Jun) ▼ In 1988, the Saudi Arabian Oil Company (commonly known as Saudi Aramco) was formally established as the sole company authorized to conduct petroleum exploration and development within Saudi Arabia. Through vertical integration domestically and horizontal equity participation abroad, Saudi Aramco evolved into one of the world’s most advanced oil development companies—ranking among the top globally in both production efficiency and product quality—a stark contrast to Venezuela and Iran. Compared to Venezuela—a major oil-producing nation that nevertheless suffers gasoline shortages—Saudi Arabia truly embodies the gulf between the First World and the Third World. (Image source: Wikipedia @ Voice of America) ▼ In short, Aramco’s growth and Saudi Arabia’s nationalization of the company were both made possible by global oil crises. Whenever a worldwide oil crisis struck, it became Saudi Arabia’s golden opportunity to generate wealth. Profits could then be reinvested into further oil exploration and expanded production, thereby feeding back into socioeconomic development and dramatically improving public welfare. Petroleum wealth is tangible and real—capable of transforming barren deserts into futuristic metropolises overnight. ▼

Underground Oil Storage Facilities—Enabling China’s Strategic Petroleum Reserves to Catch Up

By the end of the last century, senior Chinese experts recommended establishing a national strategic petroleum reserve system as soon as possible—a proposal that received high-level attention from the State Council. Based on the planned scale of China’s national strategic petroleum reserves, nearly one hundred underground oil cavern storage facilities are expected to be constructed over the coming decades. Today, our editor will guide you through an introduction to underground oil storage facilities. Development History  In the 1930s, to safely store military fuel, Swedish engineer Dr. Hageman proposed directly storing petroleum in unlined rock caverns located below the groundwater table—a method famously known as the "Swedish Method."  From 1948 until 1989, Sweden’s National Energy Agency first applied the principle of water-sealed rock caverns to store petroleum in an old feldspar mine on the outskirts of Stockholm.  In 1949 (storage continued until June 1956), a 30 m³ experimental facility was built in the Stockholm suburbs, storing 17.6 m³ of gasoline; during this period, neither the quality nor volume of the gasoline changed.  In 1950, the United States constructed an unlined underground liquefied petroleum gas (LPG) cavern storage facility with a capacity of 3,000 m³.  Between the 1960s and 1970s, large-scale construction of groundwater-sealed rock cavern oil storage facilities accelerated, with several million cubic meters built annually.  After 1973, Sweden became fully dependent on imported petroleum products. Considering the risks posed by oil crises, Sweden constructed several million cubic meters of national groundwater-sealed strategic reserves.  Between 1966 and 1983, an underground crude oil storage facility comprising four cavern chambers—with a total capacity of 410 × 10⁴ m³—was completed in Gothenburg.  Starting in 1986, Japan successively built water-sealed rock cavern storage facilities in Kuji, Kumi, and Kushimoto, achieving a total storage volume of 500 × 10⁴ m³.  By 1988, over 200 underground oil storage facilities had been built across Scandinavia, accounting for two-thirds of the region’s total petroleum product storage capacity. By the end of 2006, the world’s largest underground oil storage facility was completed in Yeosu City, South Jeolla Province, South Korea, with a capacity of 49 million barrels; South Korea’s total underground crude oil storage capacity reached 1830 × 10⁴ m³.  In 2007, India completed the world’s deepest LPG storage cavern in Visakhapatnam, with an average depth of −162 m and a maximum depth of −196 m, achieving a total storage capacity of 12 × 10⁴ m³. Advantages Above-ground oil storage facilities require stringent fire-safety standards, entail high fire-protection investment costs, and offer relatively low safety—especially vulnerable as primary targets during wartime. Steel tanks are expensive and have relatively short service lives, resulting in high overall oil storage costs. Compared to above-ground facilities, underground oil storage offers the following advantages: 1. Lower Construction Cost Where favorable engineering and hydrogeological conditions exist, constructing underground storage facilities incurs significantly lower costs than building above-ground tanks of equivalent capacity. Typically, a 5 × 10⁴ m³ underground oil storage facility costs about 25% less than its above-ground counterpart. In Germany and France, underground salt cavern oil storage facilities cost only one-third to one-quarter as much as above-ground facilities; in the United States, the cost ratio drops to one-fifth—or even lower. 2. Reduced Steel Consumption Low steel usage is a defining feature of groundwater-sealed rock cavern oil tanks. This also reduces demand for imported equipment and materials—such as specialty steels—as well as paint, while simplifying maintenance work. 3. Lower Operating and Management Costs Underground oil storage facilities can generally be designed with very large tank capacities (individual tanks reaching several hundred thousand cubic meters). Fewer tanks mean fewer associated pieces of equipment, facilitating streamlined production management and reducing administrative expenses.

Singapore to Store Saudi Oil in Underground Caverns From 2027

17 hours ago

Singapore plans to store Saudi Arabian crude oil in underground caverns from late 2027 to bolster supply chain resilience against regional disruptions. The deal involves Saudi Aramco and aims to enhance energy security in Southeast Asia.

bloomberg

2026-07-06

Oil Holds Drop as Saudi Arabian Price Cut Amplifies Glut Concerns

2026-07-07

Saudi Arabia Cuts August Crude Oil Prices Significantly, International Oil Prices Face Downward Pressure

2026-07-28

Militias in Iraq Attack Saudi Oil Facilities for a Second Day

2026-07-29

Oil Prices Surge Over $3 per Barrel Amid Renewed Middle East Hostilities

2026-08-06

Saudis Cut Main Oil Price to Asia Amid Talk of Hormuz Deal