Saudi Arabia's Q2 Deficit Drops 73% Amid War-Driven Oil Price Rally

Saudi Arabia's budget shortfall for the second quarter of 2026 plummeted by nearly 75% from the prior three-month period, thanks to the conflict that disrupted its crude production and pushed the economy into a sharp downturn. The finance ministry reported a deficit of 34.3 billion riyals ($9.1 billion) for the quarter ending in June, compared with 125.7 billion riyals in the first quarter.

Revenue from oil increased by 28% quarter-on-quarter as crude prices climbed, while expenditures dipped by 3.5%. The war proved damaging to output but surprisingly supportive for the value of whatever crude could still be shipped. Saudi production remains far below pre-conflict levels following Iranian strikes and the closure of the Strait of Hormuz.

The oil sector shrank by nearly a quarter during the period, pulling the wider economy down with it. Still, the kingdom managed to move some barrels by rerouting crude via pipelines to the Red Sea port of Yanbu, capturing much higher prices on smaller volumes. Brent traded near $90 per barrel on Thursday, up more than 47% so far this year.

The budget is not yet balanced. EFG Hermes calculates that Saudi Arabia now requires oil at roughly $115 per barrel to fund its spending, up from about $96 last year. Riyadh spent heavily in the early weeks of the war, and second-quarter outlays remained 11% above the same period a year earlier.