Saudi Arabia Seeks $8 Billion Loans Amid Iran Conflict Pressures

Saudi Arabia is seeking to secure at least $8 billion through a new loan as it faces economic pressures from the ongoing conflict with Iran. The kingdom's National Debt Management Centre (NDMC) has approached banks to gauge interest in a potential deal, according to Bloomberg.

The discussions are preliminary, and the transaction may not go ahead. Saudi state-owned oil giant Aramco is also reportedly holding similar talks with banks.

The potential borrowing comes as Saudi Arabia and other Gulf states face economic pressures from the regional conflict, which has disrupted shipping through the Strait of Hormuz, increased import costs, and strained supply chains. The kingdom's economy contracted at its fastest pace since the pandemic in the second quarter, with the oil sector shrinking by nearly 25% due to the attacks.

However, higher oil prices have provided some support for Saudi Arabia's finances. Brent crude has averaged around $87 a barrel this year, helping offset some of the fiscal pressure caused by the conflict. The kingdom recorded a second-quarter budget deficit of 34.3 billion riyals ($9.1 billion).

Saudi Arabia has become one of the most active borrowers among emerging markets, raising about $6 billion through domestic and international bonds this year, while Aramco has secured another $4 billion.