Saudi Arabia posts $33.5bn budget deficit amid drop in oil sales | Business and Economy News
Saudi Arabia Reports Significant Increase in Budget Deficit Amid Strait of Hormuz Disruptions
Published May 6, 2026
Saudi Arabia has recorded a substantial increase in its budget deficit, driven by declining oil revenues linked to the effective closure of the Strait of Hormuz.
The kingdom’s budget shortfall reached 125.7 billion riyals ($33.5 billion) in the first quarter of the year, as expenses surged alongside a decline in crude oil sales, according to figures released Tuesday by the Saudi Ministry of Finance.
Total government spending increased by 20% year-on-year to 386.7 billion riyals, while oil revenues fell by 3% to 144.7 billion riyals. This shortfall is more than double that reported during the same period last year, and it represents a nearly 33% increase from the last quarter of 2025.
The current deficit contrasts sharply with earlier projections made by Saudi officials in December, who anticipated a deficit of 65 billion riyals ($17 billion) for the entire year.
Among various sectors, spending on economic resources saw the most significant rise, climbing 52% compared to the previous year. Spending on general items increased by 46%, while expenditures on military, infrastructure, and transport rose by 26% each.
Despite the overall decline in oil revenues, non-oil revenues increased by 2%, which helped to partially offset the drop in commodity sales. As the world’s leading oil exporter, Saudi Arabia has faced considerable economic challenges due to the disrupted shipping routes in the Strait of Hormuz, a critical conduit that typically handles about one-fifth of global fuel supplies.
To mitigate the impact, the kingdom has redirected much of its exports through the Red Sea port of Yanbu via the East-West Pipeline. In 2025, crude and petroleum product sales accounted for over half of government revenues, contributing 606.5 billion riyals to state finances.
Maritime traffic in the Strait of Hormuz has been at a standstill for more than two months, amid Iranian threats against shipping. On Tuesday, U.S. President Donald Trump announced the suspension of a military initiative to reopen the strait, known as “Project Freedom,” stating that progress was being made toward a peace agreement with Iran.
