The Saudi-US alliance is entering a new phase—one characterised by maturity, equilibrium, and a shared vision attuned to a world increasingly shaped by technology
The visit of Saudi Crown Prince Mohammed bin Salman to Washington comes amid profound strategic shifts in global affairs. It coincides with an American debate over the redefinition of the US’s political and economic role on the world stage, particularly at the outset of President Donald Trump’s second term.
Among the anticipated bilateral discussions are several priorities: the transformation of the global economy, the safeguarding of energy and technological infrastructures, the strengthening of supply chains, the expansion of shared markets, and the protection of industrial and technological intellectual property.
Saudi Arabia has tied its developmental momentum to the pursuit of sustainable solutions for regional conflicts, recognising that stability is the essential condition of progress. Oil is no longer the sole driver of security commitments.
Today, efficiency in global energy governance, strategic investment in sensitive technological sectors, and broader developmental shifts constitute the new currency of international engagement, compelling nations to forge deeper security compacts.
The relationship between Saudi Arabia and the US stands as a model of strategic partnership. What began in the 1930s under the principle of ‘oil for security’ has, in recent years, undergone a profound transformation. The alliance has evolved into a latticework of shared interests that now extends well beyond traditional energy and defence, encompassing sovereign investment, advanced technology, artificial intelligence, and renewable energy.
At the heart of this strategic alignment lies AI, which has become the cornerstone of a shared vision for the future
Initial foundation
Formal economic relations between Saudi Arabia and the US began on 23 February 1930, during a formative period marked by an early emphasis on mutual commercial interests. The bond deepened in 1931 with the start of the oil trade, followed by King Abdulaziz bin Abdul Rahman Al Saud's decision to grant exploration rights to the American firm Standard Oil. That company would later evolve into the global energy titan Saudi Aramco, now wholly owned by Saudi Arabia.
The year 1932 proved pivotal. It witnessed the unification of the Saudi state and the signing of a provisional diplomatic and commercial agreement between Washington and Riyadh—their first treaty encompassing political and consular representation, trade and navigation, and judicial guarantees. From the American perspective, this accord aligned with Washington's broader efforts to break free from isolationism and support its companies and investments abroad.
This early alignment was more than transactional; it was a prescient strategic decision. The US government perceived the Arabian Peninsula's stability, as well as the founding king's appetite for economic reform—including currency modernisation—as an opportunity to secure future energy sources. This shared understanding of strategic benefit elevated economic interests above domestic political considerations in both capitals.
King Abdulaziz of Saudi Arabia and US President Franklin D Roosevelt aboard the USS Quincy in Great Bitter Lake, Egypt, on February 14, 1945.
Defining moment
A defining moment in the trajectory of bilateral relations occurred on 14 February 1945, when King Abdulaziz met President Franklin D. Roosevelt aboard the USS Quincy, shortly after Roosevelt's return from the Yalta Conference.
This historic encounter, later known as the 'Quincy Agreement', crystallised a foundational understanding: the security and stability of Saudi Arabia, guaranteed by Washington, would be reciprocated by assured American access to Saudi oil.
Though not codified as a formal treaty, this unwritten pact functioned as an irrevocable memorandum of understanding. It tied the security of the Gulf to the security of global energy, positioning Riyadh as a cornerstone of US policy in the Middle East throughout the Cold War and beyond.
With King Saud bin Abdulaziz Al Saud's accession in 1953, the alliance deepened within the framework of Washington's Cold War containment strategy. Yet the 1973 oil embargo exposed the fragility of the direct link between petroleum and politics, accelerating the need to institutionalise the economic dimension of the relationship.
New phase
On 8 June 1974, Saudi-US economic relations entered a new phase of institutional cooperation with the establishment of the Joint Saudi-American Economic Committee. This body emerged in the wake of the oil embargo and soaring energy prices, conceived to meet Saudi Arabia's growing need for materials and expertise to support its ambitious development projects.
Strategically, the committee represented far more than a mechanism for bilateral coordination. It served as an instrument of financial and political engineering, designed to facilitate the recycling of what came to be known as petrodollars. Under the terms of the agreement, the US would provide technical assistance and expertise to the Saudi government on a fully reimbursable basis.
To further strengthen the role of the private sector within this evolving partnership, the Saudi-American Business Council (SABAC) was established in 1993. Its mission was to promote joint ventures and manufacturing industries while cultivating awareness among American companies of the opportunities available in Saudi Arabia. It also aimed to deepen mutual understanding of each country's business environment and cultural landscape.
The council affirmed that Riyadh's comprehensive economic reform agenda, which included King Abdullah bin Abdulaziz's 2000 invitation to global firms to invest in the gas sector and its associated industries, had significantly expanded the scope for collaboration between entrepreneurs in both nations.
PIF: The main driver of Saudi Arabia's economic transformation
Over the years, Saudi Arabia's Public Investment Fund (PIF) has evolved from a financial investor into a strategic economic instrument. Its holdings in the US market have grown to $20.66bn, with the portfolio undergoing periodic adjustments.
The fund's strategic focus lies in high-growth sectors, such as technology and services, which are closely aligned with the objectives of Vision 2030. Among its investments are Uber Technologies in urban mobility, Lucid Group in electric vehicles, and entertainment giants like Electronic Arts and Take-Two. More recent ventures have extended into healthcare and foundational technologies.
Investments in companies such as Lucid are directly linked to Saudi Arabia's goal of localising electric vehicle manufacturing. These investments act as engines for knowledge transfer and domestic production.
The PIF's role as a major shareholder in leading American tech firms ensures Riyadh a seat at the table in shaping decisions on sensitive technological matters, thereby mitigating political risks that could disrupt the flow of vital innovations.
Defence, renewables, and AI
Saudi Arabia's defence sector has undergone a strategic transformation. Vision 2030 aims to localise more than half of the nation's defence spending—a shift that gained momentum during Trump's 2017 visit, which saw the signing of a landmark defence agreement.
Riyadh no longer confines itself to purchasing ready-made weaponry. It now seeks to harness the capabilities of its partners for technology transfer and joint development. Today, any agreement with the Saudi government requires the localisation of content. This stipulation obliges global firms, including US manufacturers, to establish production facilities within the country and to assemble portions of their final products locally.
This requirement serves two strategic purposes. First, it ensures the transfer of technological expertise to Saudi professionals. Second, it transforms defence spending from a mere security expense into a catalyst for domestic economic development and job creation.
The modern Saudi-US partnership has increasingly pivoted towards advanced technological sectors, as Saudi Arabia charts its course from a traditional economy to a digital one driven by innovation. At the heart of this strategic alignment lies AI, which has become the cornerstone of a shared vision for the future.
Guests at the booth of the Saudi artificial intelligence company HUMAIN during the Future Investment Initiative conference in Riyadh.
Riyadh's efforts have included substantial investments in digital training and capacity-building, undertaken in collaboration with major American firms such as Google, Apple, and Amazon. These initiatives have significantly expanded the nation's pool of digital talent. They also affirm Saudi Arabia's emergence as a pivotal global player in shaping the future of AI through sustained investment in digital infrastructure.
In the energy sector, cooperation has moved beyond oil to embrace clean energy solutions. A prime example is the NEOM Green Hydrogen Project, a landmark investment partnership with the American company Air Products and Saudi Arabia's ACWA Power. This initiative is expected to contribute nearly 10% of the global target for carbon-free hydrogen production.
Trump's visit to Riyadh in May marked a turning point in the economic trajectory of bilateral relations. The visit served as a platform to reaffirm the depth of commercial and investment ties between the two nations, with a renewed focus on future-oriented sectors aligned with both Vision 2030 and the 'America First' agenda.
What most distinguished the visit was the scale and scope of the economic commitments announced. These extended well beyond traditional defence deals to encompass technology, AI and infrastructure. Through its firm Data Volt, Riyadh declared investments in AI data centres and energy infrastructure across the US.
Meanwhile, a host of American companies, including Google, Oracle, and Uber, unveiled joint ventures and technological projects with Saudi partners in both countries. Energy cooperation was further deepened through agreements and memoranda of understanding focused on infrastructure development and crucial minerals.
In the realm of AI and emerging technologies, Saudi Arabia signed strategic partnerships with firms such as NVIDIA and AMD to bolster its domestic AI infrastructure and expand its national capabilities in this transformative field.
The latest agreements have reinforced Saudi Arabia's commitment to economic diversification beyond oil, securing investment and the sharing of knowledge in high-growth sectors such as AI, electric vehicles and entertainment. Saudi stakes in sensitive American tech firms, including semiconductor and chip manufacturers, have secured the country a seat at the table in shaping critical technological decisions.
Saudi Crown Prince Mohammed bin Salman shakes hands with US President Donald Trump on the sidelines of the G20 summit in Osaka, Japan, on 29 June 2019.
New phase
Today, Saudi-US relations are entering a new phase—one that redefines the priorities and instruments of partnership. Washington no longer views energy security as its sole imperative, just as Riyadh no longer regards military protection as the exclusive guarantor of national security. What now binds the two capitals is a web of economic, investment, and technological interests governed by reciprocity and mutual benefit.
The crown prince's visit to Washington and the agreements forged during Trump's second term reveal the depth of transformation underway. Saudi investments in the American market, coupled with the widening scope of cooperation in AI, clean energy, and localised defence industries, signal a maturing alliance increasingly rooted in institutionalised and interwoven economic foundations.
In a world unsettled by shifting power dynamics and fragile supply chains, the Saudi-US alliance is being fortified through a new era of mature and balanced partnership. It is a partnership led by technology and reshaped by converging interests. Both Riyadh and Washington now recognise that their shared future depends not merely on political assurances, but on an economic interdependence that renders each a stakeholder in the other's enduring stability.
