Saudi Arabia’s fiscal deficit narrows 75% as oil prices spike on Iran war tensions

Saudi Arabia’s quarterly fiscal deficit shrank by nearly 75%, according to fresh government data, as a surge in global oil prices offset the economic drag from the ongoing conflict with Iran. The improvement came after a bruising start to 2026. The kingdom posted a deficit of SAR 125.7 billion, roughly $33.5B, in the first quarter alone, the largest shortfall in nearly eight years. That single quarter consumed 76% of the government’s entire full-year deficit target before spring had even arrived. How oil prices bailed out the budget Saudi Arabia’s government revenues are overwhelmingly tied to crude oil, so when Brent prices surged past $90 per barrel, the fiscal math improved quickly. Riyadh had built its 2026 budget around an oil price assumption of roughly $72 per barrel. The fiscal breakeven sits between $80 and $85 per barrel. The conflict that began on February 28, 2026, following US and Israeli strikes on Iran, initially hit Saudi finances hard. Military spending jumped. Revenue fell short in the early weeks. The Q1 deficit swelled as a result. Aramco, the kingdom’s state oil giant, reported a 25% profit jump in Q1 2026 despite volume constraints. The East-West Pipeline beca...