Oil prices have dropped recently due to concerns over a potential US-China trade war and OPEC+’s unexpected decision to boost production. This decline is putting pressure on economies in the Middle East that rely heavily on oil revenue, especially Saudi Arabia.
Analysts expect oil prices to remain low for the next few years, with major banks predicting Brent crude to average between $58 and $66 a barrel in 2025 and 2026. Lower prices are particularly challenging for Saudi Arabia, which needs oil above $100 a barrel to balance its budget. If prices stay around $60, the country’s fiscal deficit could more than double compared to official forecasts.
Despite these challenges, Saudi Arabia continues to invest in large-scale projects as part of its Vision 2030 plan to diversify its economy. These include the ambitious NEOM city, luxury resorts, and entertainment hubs near Riyadh. However, experts warn that some of these “giga-projects” may face delays if the government reduces spending.
OPEC+ has struggled to keep its members within agreed production limits, with some countries exceeding quotas and creating internal friction. Recent moves to increase output may have been aimed at penalizing overproducers, but ongoing disputes and national interests threaten to keep prices low.
While lower oil prices could slow Saudi Arabia’s diversification efforts, the country still benefits from low production costs and manageable debt. Experts believe Saudi Arabia can adapt by adjusting spending and borrowing, making it better positioned than many of its peers to weather the downturn.