Saudi Fiscal Deficit Shrinks 75% as Oil Prices Spike Amid Iran Conflict

Saudi Arabia's fiscal deficit has shrunk by nearly 75% due to rising oil prices, offsetting the economic impact of the conflict with Iran. The kingdom's government revenues are heavily reliant on crude oil, and when Brent prices surged past $90 per barrel, the fiscal math improved significantly.

The Saudi government had built its 2026 budget around an oil price assumption of roughly $72 per barrel, but the breakeven point sits between $80 and $85 per barrel. Aramco, the kingdom's state oil giant, reported a 25% profit jump in Q1 2026 despite volume constraints.

The East-West Pipeline became a strategic lifeline during this period, allowing Aramco to route exports through the pipeline to Red Sea terminals, reducing exposure to the most dangerous chokepoints. However, non-oil revenues remain too small to meaningfully cushion the budget when oil underperforms.