Saudi Aramco's market value tops the world's largest! Why is the Middle East so rich?

Saudi Aramco has become the world's largest oil company by market value due to soaring oil prices and production. Why is there so much oil in the Middle East? What are the magical things about this land "floating on oil"?

Compiled by New Media Editor Duan Dawei

Friends who have been paying attention to the stock market recently will find that Saudi Aramco has surpassed Apple to become the company with the highest market value in the world.

▲Data as of May 18, 2022 (Source: Tonghuashun)

Saudi Aramco is the national oil company of Saudi Arabia and the largest oil company at present. It is mainly engaged in oil exploration, development, production, refining, transportation and sales, and owns the world's largest onshore and offshore oil fields.

▲Saudi Arabian Oil Company logo (Photo source: NetEase News)

Saudi Aramco said that the recent surge in profits was mainly due to the surge in oil and gas prices. Since the beginning of this year, oil prices have risen by 45%. Secondly, it also benefited from the gradual increase in production by Saudi Arabia, the Organization of Petroleum Exporting Countries and other member countries. From January to March this year, Saudi Aramco's average daily production was 10.2 million barrels, a year-on-year increase of 20%.

Why is there so much oil in the Middle East? What are the magical things about this land "floating on oil"?

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The magical liquid that "flows" into the long river of history

The Middle East is like a key that controls the fate of the whole world, because the world is bound into a community by a magical liquid, which is the national treasure of the Middle Eastern countries - oil.

The discovery of oil in the Middle East is not a modern thing. As early as 3,000 years ago in the ancient Babylonian period, people here used oil. However, at that time, people did not know that this sticky liquid could be used as fuel. They found that this oily substance was very waterproof, so it was used as a waterproofing agent for ships.

The first time oil was ignited in the Middle East dates back to the 5th century, when the Persians dug wells around the Dead Sea to extract oil and used it as a combustion accelerant on the battlefield. This was the first time oil was associated with war.

It was the Byzantine Empire, also known as the Eastern Roman Empire, that really pushed Middle Eastern oil to its peak in ancient times. They mixed lime and other materials into oil to make a kind of jet firearm, which was called Greek fire, also known as Byzantine wildfire.

▲Greek fire in the painting (Photo source: International Law and the Proliferation of Weapons of Mass Destruction)

This "artifact" left a big shadow on the Arabs, because the fire it produced could not be extinguished even with water. Because of the great demand for Greek fire, the Byzantine Empire mined a large amount of oil in the Middle East. However, after the fall of the Eastern Roman Empire, this firearm also went into history and disappeared in the long river, and oil extraction in the Middle East entered a silent era.

At the end of the 18th century, with the demise of the Ottoman Empire, the Middle East became a colony of the West. The climate here is dry and rainy. Except for the Mesopotamian Plain, other regions are not suitable for agricultural development. Business is monopolized by Europeans. The Middle East can only develop some animal husbandry and start breeding camels. At this time in Europe, the first industrial revolution was in full swing.

But they soon encountered a bottleneck. With the beginning of the Second Industrial Revolution, mankind entered the "electrical age" and electricity became the main power source. At the same time, after the successful creation of the internal combustion engine, oil became an important energy source. But Europe's own resources were very limited, so they focused their attention on the Middle East.

(Photo source: Hexun News)

The development of science and technology allowed Europe to analyze the composition and structure of Greek fire, so some oil merchants believed that the Middle East was rich in oil. Sure enough, from 1920, oil fields were discovered in the Middle East one after another. Around 1940, oil fields were officially mined, and the Middle East became the center of world industry. After World War II, the world was in ruins and the demand for oil was huge. The Middle East seized the opportunity to expand the oil industry and turned it into its own pillar industry. A real energy region was born.

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The “Black Gold” Given by the Earth

In fact, the country with the largest oil reserves in the world is not in the Middle East, but in Venezuela in South America. The total proven oil reserves have reached more than 300 billion barrels.

(Photo source: Science Exploration)

However, compared with countries in the Middle East, Venezuela's abundant oil resources cannot be fully exploited, and they are all located deep underground, making the cost of exploitation higher.

▲An oil pump in Venezuela (Photo source: Market Watch)

At the same time, the quality of Venezuela's oil is relatively low. Coupled with the country's backward economy and weak infrastructure, it is unable to build oil extraction facilities, let alone effectively extract it. However, these problems do not exist in the Middle East.

Saudi Arabia is the country with the second largest oil reserves in the world. According to the 69th edition of the "Statistical Yearbook of World Energy", as of 2019, 297.6 billion barrels of oil have been proven. It is also the world's largest oil exporter and is known as the "Oil Kingdom". There may even be 100 billion barrels of oil hidden underground in Saudi Arabia that have not been discovered.

From a geographical perspective, the countries in the Middle East that have large amounts of oil are all located along the coast of the Persian Gulf, including Iran, Iraq, the United Arab Emirates and Kuwait in addition to Saudi Arabia.

▲Schematic diagram of the Himalayan orogeny (Photo source: Planetary Research Institute)

Why is the Middle East rich in oil? This story goes back a long time ago. As early as the Permian period 250 million years ago, the continents on the entire earth were squeezed together, which is called "Pangaea" in geology. In the Jurassic period about 180 million years ago, Pangaea began to disintegrate. It first separated north and south, forming Laurasia in the north and Gondwana in the south. Then an ocean appeared in the south of Laurasia, known as the Tethys Sea, which was the first stage of the disintegration of Pangaea.

(Photo source: Global Science View)

Then, about 140 million years ago in the early Cretaceous period, the second disintegration of the Pangaea supercontinent occurred. This disintegration mainly occurred in the south. Gondwana began to split, and the prototypes of South America, Africa, Australia and Antarctica began to form. The Indian subcontinent also separated and drifted towards the northeast. During this period, Laurasia in the north was relatively stable. Except for the separation of North America, the rest of the land remained almost unchanged. This was the largest continent on Earth, the predecessor of Eurasia.

At this time, the Pangaea supercontinent had disappeared, but its disintegration was not over. In the 10 million years after the end-Cretaceous extinction event, the Indian subcontinent had been moving closer to the Eurasian continent. Finally, 55 million years ago, there was compression between the plates. The Tethys Sea between the two plates began to shrink, and countless small islands emerged from the sea. Some land that had never existed before was born, including the Middle East.

(Image source: Global Science)

After tens of millions of years of compression, the Tethys Sea eventually disappeared in the history of the Earth, leaving only a small part, which is today's Mediterranean Sea. The land that was squeezed out stretches from the Alps in the west to the Qinghai-Tibet Plateau in the east. This is the Alps-Himalayan mountain system.

The Middle East is the region that was formed by this mountain-building movement. Since it was formerly an ocean, a large number of marine organisms in it were buried in the earth's crust during this change process. The African plate was squeezed by the Eurasian plate, and the Middle East was located at the junction of the two plates. Under such influence, the marine organisms produced oil through complex physical and chemical reactions.

(Photo source: NetEase News)

Because the earth's crust is very young, the oil in the Middle East is not buried very deep. It is all shallow oil and easy to mine. Therefore, the mining efficiency in the Middle East is the highest in the world.

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New energy may affect the future of "black gold"

Nowadays, new energy has become a research direction almost all over the world. This is not only because non-renewable oil resources are gradually decreasing, but also because the earth's environment is gradually deteriorating. Whether it is oil or coal, the gases emitted have brought serious harm to the earth. For example, acid rain and greenhouse effect have become important problems facing mankind in the 21st century.

For the oil industry, investing in this industry has been able to generate extremely high returns for a long time in the past. However, in the past decade, the promotion of wind and solar energy has also had a certain degree of impact on it.

Compared with the oil industry, renewable energy sources such as wind and solar have zero short-term marginal costs, but a very high return ratio. Apart from the initial equipment costs, there is almost no cost in the entire process. Moreover, as the cost of these equipment decreases, the cost of using these renewable energy sources in the future will be greatly reduced. On the contrary, oil is a huge cost expenditure, whether it is mining or exploration. Therefore, on this road of future energy, oil will not be a lone traveler.

(Source: Tonghuashun, The Answer is Here, Global Science, NetEase News, Global Science View, Sohu News, etc.)

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