Kingdom announces sharp rise in budget shortfall as Strait of Hormuz remains closed. Saudi Arabia’s budget deficit widened to 125.7 billion riyals in the first quarter of 2026, with government spending up 20 percent and oil revenues down 3 percent. This deficit is more than double that of the same period last year, marking a significant departure from earlier projections. The closure of the Strait of Hormuz has affected oil exports, leading to a loss of key revenue for the kingdom.
Why It Matters
The sharp rise in Saudi Arabia’s budget deficit underscores the impact of the effective closure of the vital Strait of Hormuz on the kingdom’s economy. With declining oil revenues and increased government spending, the deficit has surpassed earlier projections. The situation highlights the vulnerability of countries heavily reliant on oil exports to disruptions in global trade routes, emphasizing the need for economic diversification and stability measures.
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