<\/p>\n
Saudi Arabia\u2019s economy saw its sharpest quarterly contraction since the Covid-19 pandemic, as the US-Israeli war against Iran poses challenges to the vital oil industry.<\/p>\n
Gross domestic product shrank 4.8% year-on-year in the three months through June, according to preliminary data from the General Authority for Statistics on Thursday. That compares with growth of 3% in the first quarter.<\/p>\n<\/p>\n
The contraction was driven by an 24.7% decline in the oil sector, versus 2.9% growth in the first quarter. Non-oil activity, a focus for authorities as they attempt to reposition the economy, expanded 0.6% compared with 2.9% last quarter.<\/p>\n
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The figures highlight the pressures months of war between the US and Iran are placing on the Middle East\u2019s largest economy, with no sign of a definitive peace deal on the horizon. At various stages of the conflict, Tehran has struck US allies across the Persian Gulf, including Saudi Arabian energy facilities.<\/p>\n
The crisis has effectively blocked for weeks at a time the Strait of Hormuz, the Gulf choke point through which a fifth of the world\u2019s oil once transited. Saudi exports via the route resumed in June after a preliminary US-Iran peace deal, only to face renewed Iranian threats when the ceasefire unraveled this month.<\/p>\n
The world\u2019s largest oil exporter has enacted a workaround, redirecting crude flows via a pipeline to the Red Sea port of Yanbu that offers another exit route to global markets. A fresh threat to Saudi ports and shipping from Iran-backed Houthi rebels in neighbouring Yemen has now added risks there too.<\/p>\n
Saudi oil production levels remain below prewar rates, although the kingdom has partially benefited from spikes in the price of crude, which reached $92.7 a barrel on Thursday.<\/p>\n
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The International Monetary Fund said Saudi Arabia was \u201cshowing agility and resilience,\u201d reflecting the kingdom\u2019s \u201cstrong macroeconomic fundamentals and diversified oil and logistics infrastructure.\u201d<\/p>\n
A recovery is expected to take hold when maritime traffic through the Strait of Hormuz gradually returns to normal, the Washington-based lender said in a statement on Wednesday. It expects Saudi economic growth to slow to 1.7% in 2026, before accelerating to 5.5% the following year.<\/p>\n
Over the medium-term, growth will be supported by \u201cbuoyant consumption and investment, including government-led projects and major international events, and by sustained structural reforms under Vision 2030,\u201d said the IMF.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
#Saudi #economy #shrinks #war #roils #oil #exports<\/p>\n","protected":false},"excerpt":{"rendered":"
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