Oil & Gas

Saudi Arabia posted a $15.6 billion budget deficit in Q1 2025 over half its full year forecast driven by an 18% drop in oil revenues and minimal growth in non oil income. The shortfall was fully covered by borrowing, highlighting the Kingdom’s dependence on debt markets.

The financial situation is expected to worsen as oil prices have since dropped by over $10 per barrel due to global demand concerns, rising OPEC+ output, and new U.S. tariffs. Analysts warn that if prices average $62 per barrel this year, the deficit could more than double to $67 billion, potentially delaying major investment projects.

Still, Saudi Arabia seems willing to weather the downturn to maintain its influence within OPEC+ and pressure U.S. shale producers. However, with spending ambitions like the Neom city project on the line, the durability of this high-stakes strategy remains uncertain.