Saudi Arabia Posts $33.5 Billion Budget Deficit as Oil Revenue Drops
John Power
Saudi Arabia's Finance Ministry reported a budget deficit of 125.7 billion riyals ($33.5 billion) in Q1 2026, more than double the figure from a year earlier. The deficit surged due to a drop in crude oil revenue as the Strait of Hormuz was effectively closed, while government spending rose 20%.
Saudi Arabia has recorded a sharp increase in its budget deficit in the first quarter of this year, as revenue from oil slumped after the Strait of Hormuz was effectively shut.
According to the latest data released by the Saudi Finance Ministry on April 28, the country's budget deficit in the first three months reached 125.7 billion riyals ($33.5 billion). The primary reasons are rising government spending and declining revenue from crude oil.
Specifically, total government spending in Q1 2026 rose 20% compared with the same period last year, to 386.7 billion riyals. Meanwhile, oil revenue fell 3%, to 144.7 billion riyals.
The deficit was more than double the figure for the same quarter in 2025 and rose nearly a third from the final quarter of last year. It also far exceeded the Saudi authorities' own projection made in December 2025, when they forecast the full-year 2026 deficit at about 65 billion riyals ($17 billion).
By sector, spending on economic resources posted the biggest increase, up 52% year-on-year. Spending on general items rose 46%, while the military, infrastructure and transport sectors each rose 26%.
Non-oil revenue rose 2%, partly offsetting the decline from goods sales.
As the world's largest oil exporter, Saudi Arabia lost a key revenue source when maritime traffic through the Strait of Hormuz ground to a halt. However, the kingdom was able to divert most of its exports through the East-West pipeline to the Red Sea port of Yanbu.
Revenue from crude oil and petroleum products accounts for more than half of Riyadh's total budget income, contributing 606.5 billion riyals to the treasury in 2025.
The Strait of Hormuz, which normally carries about one-fifth of the global fuel supply, has been paralyzed for more than two months because of Iranian threats to vessels in the area. On April 28, U.S. President Donald Trump suspended a military campaign to reopen the strait, called 'Project Freedom', less than 48 hours after it began, citing 'major progress' in peace negotiations with Iran.
