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The judicial and administrative bodies of the province, plus several government departments, are located in the city. Dammam is a major administrative center for the Saudi oil industry. Together with the nearby cities of Dhahran and Al Khobar , Dammam forms part of the Dammam Metropolitan Area, which is commonly known as greater Dammam and has an estimated population of 4,, as of Dammam and its suburbs form the center of the Dammam metropolitan area , also known as Greater Dammam, which is closely linked to the city through social, economic, and cultural ties.
The origins of the name "Dammam" are disputed. Some say that it is onomatopoeic and was given to the area because of a drum positioned in a nearby keep, which was sounded in a pattern called "damdamah" to alert the residents of returning fishermen's ships. Others say that the name comes from the Arabic word "dawwama" whirlpool , which indicated a nearby sea site that dhows usually had to avoid. However this tiny episode gave a population to Khobar boost as well as close ties with the bigger city of Dammam.
When the modern Kingdom of Saudi Arabia was founded in , the area was the site of several hamlets that depended on fishing and pearls for their survival. Over a span of a little more than half a century, the area has developed into a thriving hub of industry, commerce and science, and home to more than a million people. The area's transformation was launched with the discovery of oil in commercial quantities. The Eastern Province sits atop one of the largest oil fields in the world, and it was here in Dhahran in that Aramco, the predecessor of the national oil company of Saudi Arabia, Saudi Aramco, dug the famous Dammam No.
The discovery of new oil fields to the south, west and north of Dammam in the s and s, which now account for a quarter of the world's proven oil reserves, triggered a building boom. The Albinali Family, led by Sheikh Muhammad Nasir Albinali and Brothers played a crucial role in the development of the city of Dammam and the Eastern province in various fields. This company was the first Saudi construction company to develop Aramco, the roads from connecting the new industry's roads necessary for the economical development of the country.
To name a few are: Dammam to the pertrolum wells to the north, Dammam to Riyadh, Dammam Port Expansion so tankers can load up multiple expansions , the first covered shopping center in in the city of Dammam known as Ayal-Nasir Sons of Nasir. This in turn led to expatriates and technicians from throughout the kingdom and the world gathering to help search for new oil fields and bring them on-stream.