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How much volatility is the Saudi Arabian petrochemical industry exposed to - Dissertation Example

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Finance & Accounting
Pages 84 (21084 words)


The present paper aims at examining the volatility in the Saudi Arabian petrochemical industry with respect to the domestic stock exchange Tadawul. The target is to examine the investment prospects in the industry and figure out methods of improvising the situation…

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How much volatility is the Saudi Arabian petrochemical industry exposed to

Saudi Arabia is intrinsically dependent upon petroleum and petrochemical industry for its revenues and income. The nation’s huge oil reserves have assisted it in getting developed as one of the largest producers and exporters of petroleum and petrochemical goods. Precisely, the nation accounts for 20 percent of global petroleum reserves in the world and exports US$ 157.41 billion worth of the fuel. Importance of the sector behind the development of the nation could be well perceived from the fact that it contributes around 75 percent to government budget, 45 percent to the GDP and constitutes of 90 percent of Saudi Arabia’s export earnings (Organisation of the Petroleum Exporting Countries, 2009). This high degree of dependence of Saudi Arabia upon its oil reserves bore fruit to the nation during the Arab-Israeli war of 1973 which increased oil prices to a peak thus facilitating the process in which Saudi Arabia became one of the fastest growing economies in the world (U.S. Department of State, 2011). Such instances had been common for Saudi Arabia as it had been for other oil producing nations in the world. However, oil prices are susceptible to high degrees of fluctuations, which is the reason why it is important to assess the extent of volatility that the industry is exposed to. ...
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