Saudi Arabia posts biggest Q1 budget deficit since 2018
Updated
Updated · Bloomberg · May 5
Saudi Arabia posts biggest Q1 budget deficit since 2018
10 articles · Updated · Bloomberg · May 5
The finance ministry reported a 125.7 billion riyal ($33.5 billion) shortfall, up from 95 billion riyals in the final quarter of 2025 and more than double a year earlier.
The deficit widened after the Strait of Hormuz closure curbed Saudi oil exports, while spending kept rising on projects aimed at diversifying the economy beyond crude revenues.
The figures highlight the kingdom's vulnerability to export disruptions even as it pushes ahead with costly long-term transformation plans under its economic reform agenda.
Can Saudi Arabia's ambitious Vision 2030 survive a catastrophic drop in oil revenue caused by the Hormuz crisis?
With 2,000 ships stranded, is the world facing a food and supply chain crisis far beyond the shock to oil prices?
Will the US mission to reopen the Strait of Hormuz succeed, or will it ignite a larger war in the Middle East?
Q1 2026 Saudi Budget Deficit Hits SAR 125.7 Billion Amid Strait of Hormuz Closure and Spending Surge
Overview
In Q1 2026, Saudi Arabia faced a record budget deficit of SAR 125.7 billion triggered by the US-Israel conflict with Iran, which led to the closure of the Strait of Hormuz and attacks on energy infrastructure. These events caused oil production to plunge from 10.9 to 7 million barrels per day, sharply reducing oil revenues despite a 55% surge in global oil prices. At the same time, government spending rose 20% to address security and crisis needs, deepening the deficit and pushing public debt to SAR 1.67 trillion. The conflict also forced a strategic shift in Vision 2030, scaling back megaprojects and focusing on resilient sectors like AI and tourism, while foreign investors reassessed risks amid growing financial pressures.