Saudi Arabia reported a much smaller quarterly budget deficit in the second quarter, even as conflict-related market turmoil pushed its oil industry lower and weighed on the broader economy. According to the available figures, the deficit narrowed by nearly three-quarters from the prior period.
The shift appears tied to the same war-driven disruption that reduced Saudi oil output but lifted oil revenue. Lower production would normally pressure public finances, but stronger income from the market offset part of that hit and helped improve the budget picture.
At the same time, the country’s economy was described as suffering its sharpest contraction since the pandemic era. That underscores the uneven effect of the oil market shock: government revenue improved, while overall economic activity faced heavier strain.
The latest data highlights how Saudi Arabia’s finances remain closely linked to oil market swings. In this case, a conflict that hurt output also supported revenue enough to sharply reduce the kingdom’s quarterly budget gap, reported at about 34.3 billion riyals.
