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Saudi Arabia Q2 Budget Deficit Narrows as Oil Revenue Jumps 22%

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Saudi Arabia cut its Q2 budget deficit to 34.3 billion riyals ($9.1 billion) as oil revenue climbed 22% over the year, the Ministry of Finance said Thursday in its quarterly budget.

Total revenue reached 338.8 billion riyals in the quarter, up 12% from a year earlier, while expenditure rose 11% to 373.1 billion riyals, leaving the 34.3 billion-riyal shortfall, the ministry said.

Oil revenue rose to 185.1 billion riyals from 151.7 billion riyals a year earlier, accounting for about 55% of total revenue. Non-oil revenue increased 3% to 153.7 billion riyals.

In the first half of 2026, Saudi Arabia collected 329.8 billion riyals in oil revenue, up 9% over the year. Non-oil revenue reached 269.9 billion riyals, up 2%, according to the ministry. The cumulative H1 deficit stood at 160 billion riyals, which the ministry said was financed entirely through borrowing, with no drawdown from government reserves.

Higher crude prices supported government revenue during the quarter despite disruptions to oil exports after the Strait of Hormuz blockade.

Saudi Arabia continued shipping crude through alternative routes, including its East-West Pipeline to the Red Sea port of Yanbu, helping maintain exports even as regional tensions persisted.

Although the conflict disrupted energy flows and kept crude production below pre-war levels, the rise in oil prices more than compensated for lower export volumes, according to a Bloomberg report. The stronger pricing environment helped narrow the fiscal deficit from the previous quarter.

Higher oil prices could narrow Saudi Arabia's 2026 budget deficit. The International Monetary Fund sees the fiscal gap easing to 3.7% of gross domestic product in 2026 and 3.1% in 2027 despite lower export volumes, Bloomberg reported.

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