Saudi modernisation drive reflected in Aramco's faltering sale | Larry Elliott

The oil-rich nation is aware of an urgent need to diversify, but it still has a long way to go

On 2 March 1938, Saudi Arabia was a largely nomadic society with a sideline in the tourism generated by pilgrimages to Mecca. The following day, oil was discovered at Dharam and the country's prospects were transformed for ever.

It took time for the full extent of Saudi Arabia's crude reserves to become known, not least because in early 1938 the world had other things on its mind. But by the time the second world war was over, it was clear that beneath the desert sands there was an abundance of oil that could be easily brought out of the ground. Cheap Saudi oil was a vital component of the world economy's long post-war boom and the revenues from petroleum exports paid for roads, bridges, apartment blocks and western-style living standards.

Related: Oil giant Aramco's $2tn flotation is still on, says Saudi Arabia