Oil is near $100, so why is Saudi Arabia running a deficit?

What happened

Saudi Arabia's government spent 84 billion riyals ($22.4 billion) more than it collected in July–September, the Ministry of Finance reported on 3 November. Revenue was 259 billion riyals and spending about 343 billion. The deficit was 2.4 times the second quarter's 34.3 billion riyals, though slightly smaller than the 88.5 billion of the same quarter of 2025.

The surprise is oil. Oil revenue fell 23% from a year earlier, to 116.5 billion riyals, and by almost 40% from the second quarter, its lowest since 2020, according to Bloomberg. Yet Brent crude averaged about $101 a barrel in the quarter, against about $70 a year earlier. Non-oil revenue held up: 412.5 billion riyals in the first nine months, up 8%.

Why a high price did not mean high revenue

An oil exporter's income is the price multiplied by the number of barrels it sells, and then whatever share of that reaches the government. All three moved this year:

• Volumes: the war with Iran, which began on 28 February, effectively closed the Strait of Hormuz, Saudi Arabia's main export route. The kingdom has diverted crude through a pipeline to Yanbu on the Red Sea, but that only partly replaces the lost route.
• Price swings: Brent averaged about $124 a barrel in April and about $70 in June before rising again, and the Saudi state is paid with a lag, through royalties and fees from Aramco that follow the prices Aramco actually realises.
• Spending: the government expects higher spending on defence and infrastructure.

Our oil shocks mechanic explains why a supply shock sends money from importers to exporters. This one is different: it hits exporters too, because the shock is a physical block on their own shipments.

How the gap is filled

The nine-month deficit, about 244 billion riyals, already equals the government's mid-year forecast for the whole year: 245 billion riyals, or 4.9% of GDP, up from 165.4 billion (3.3%) in the original budget. Saudi Arabia, whose riyal is pegged to the dollar, covers deficits by borrowing in local and international markets. Some economists quoted by Bloomberg expect a deficit closer to 6% of GDP, while others expect oil revenue to rebound in the fourth quarter as exports recover. See how government debt grows.

Where it sits in the chain

This is Link 4, energy, seen from the producer's side: the same war that pushed up fuel prices for importers cut the volumes that pay Saudi Arabia's bills, and the gap shows up in its budget and borrowing (Link 2).

What to watch

• The talks between the US and Iran, and whether shipping through Hormuz resumes.
• Saudi export volumes through the Red Sea.
• The 2027 budget, usually published in December.