This paper is an attempt to start exploring the internal diversity in the transforming rentier state in Saudi Arabia. It particularly questions if its peripheries, rural areas, are readier for post-oil economy than its urban centers which are considered to be the cores of the distributive state. The urban-rural divide appears to matter a great deal to Saudi Arabia which is home to the largest local population (i.e. excluding foreigners) among the GCC countries, at over 21 million, and has broad rural areas that spread across the Arabian Peninsula, in addition to the three urban centers (Riyadh, Jeddah and Makkah, and the Eastern Province). These rural areas are home to over a third of the all Saudi households. The Saudi rentier state, as its distributive capacity declines due to the low oil prices and the local population growth, is increasingly selective in distribution: while maintaining distribution to the urban centers, it is less able to cover rural areas, particularly some regions in the north and the south, as indicated by higher unemployment rates in the latter. Given that unemployment has been a major driver of economic diversification in Saudi Arabia over the past quarter century, these less distributed rural areas are, in theory, considered to be bridgeheads for the country’s transition to post-oil economy in which the private sector employs a greater local workforce. Nevertheless, in reality, labor localization rates are lower in rural areas despite local citizens’ more limited access to public-sector jobs and lower wage levels of these jobs there.