Saudi Arabia posts $33.5B budget deficit on oil revenue drop
Saudi Arabia has recorded a sharp increase in its budget deficit, driven by declining oil revenues amid disruptions linked to the effective closure of the Strait of Hormuz.
The kingdom’s budget shortfall widened to 125.7 billion riyals ($33.5bn) in the first three months of the year, as higher government spending coincided with lower crude income, according to the latest figures released by the Saudi Ministry of Finance on Tuesday, News.Az reports, citing Al Jazeera.
Total government expenditure rose 20% year-on-year to 386.7 billion riyals, while oil revenues declined 3% to 144.7 billion riyals, the data showed.
The resulting deficit was more than double the shortfall recorded in the same period last year, and nearly one-third higher than the final quarter of 2025.
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The figures represent a notable shift from the kingdom’s earlier fiscal expectations for the year. Saudi officials had projected in December a deficit of 65 billion riyals ($17bn) for the whole of 2026.
By sector, spending on economic resources recorded the largest increase, rising 52% year-on-year. Expenditure on general items increased 46%, while military, infrastructure, and transport spending each rose by 26%.
Non-oil revenues increased 2%, partially offsetting weaker commodity-related income.
As the world’s largest oil exporter, Saudi Arabia has been impacted by reduced shipping activity through the Strait of Hormuz, a critical global energy route. However, the kingdom has redirected part of its exports through the Red Sea port of Yanbu via the East-West Pipeline.
Crude and petroleum product sales remain central to state finances, accounting for more than half of government revenue and generating 606.5 billion riyals for the state in 2025.
Maritime traffic through the Strait of Hormuz—normally responsible for around one-fifth of global fuel shipments—has reportedly been halted for more than two months due to Iranian threats against regional shipping.
On Tuesday, US President Donald Trump suspended a military operation aimed at reopening the strait, known as “Project Freedom,” less than 48 hours after it began, citing “great progress” toward a potential peace deal with Iran.
By Nijat Babayev
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