Saudi Arabia Faces $8bn Deficit in Q3 as Oil Prices Dip

Saudi Arabia reported a substantial fiscal deficit of $8 billion for the third quarter of 2024, primarily driven by a sharp decline in oil prices and production. The country’s finances were strained by reduced oil revenues, which continue to be the cornerstone of its economy, despite efforts to diversify into non-oil sectors. This latest setback comes amidst the ongoing global decline in crude prices, which have affected oil-exporting nations worldwide.

The Kingdom's reliance on oil revenues has made it vulnerable to fluctuations in global markets. As part of its Vision 2030 reform plan, Saudi Arabia has been attempting to reduce its dependence on oil, focusing on diversifying its economy with private sector investments, tourism, and technology. However, the global slowdown in oil demand and lower prices in 2024 have counteracted some of these efforts.

Saudi Arabia’s non-oil sector, while growing, has not been sufficient to offset the revenue shortfall from its oil exports. The government has continued its push for infrastructure projects and other diversification measures but has found that lower oil prices severely limit fiscal flexibility. Even with Vision 2030's ambitious targets, the economic transition will take time, and such deficits highlight the ongoing challenges in shifting away from the oil dependency that has historically defined the country’s economic structure.