TREE NEWS reports: Saudi Arabia’s third-quarter fiscal deficit widened to 84 billion riyals, more than double the previous level, as oil revenue plunged nearly 40% quarter-on-quarter to about 116 billion riyals, the lowest since 2020. The drop was driven by turmoil from the US-Iran war and lower payments from state oil giant Aramco. Non-oil revenue fell about 7% while overall spending declined 8%. Economists expect oil revenue to rebound in the fourth quarter on stronger crude prices and higher Aramco royalties, but forecast a wider deficit at an estimated 5.6%-6% of GDP.
Saudi Q3 budget deficit more than doubles to 84 billion riyals
AI take
The composition of this deficit matters more than its size: a near-40% quarterly collapse in oil revenue, the weakest since 2020, alongside a 7% fall in non-oil revenue, suggests diversification is not yet offsetting hydrocarbon volatility — a pointed signal for a kingdom whose fiscal story has leaned heavily on non-oil growth. The IMF-style forecast of a wider full-year deficit even with an expected Q4 oil rebound implies the swing factor is crude prices and Aramco royalties rather than spending discipline. Whether non-oil revenue resumes growth as war-related disruption fades is the open question for Gulf sovereign credit and Riyadh's project pipeline.
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