The recent drop in oil prices has become a significant factor that could dramatically change the financial landscape of Saudi Arabia and its ambitious economic goals. Predictive analytics from Goldman Sachs project that the kingdom’s budget deficit may reach $67 billion this year. This figure is more than double the government's initial expectations for the end of 2025 and poses additional challenges for Crown Prince Mohammed bin Salman.

Reasons for the Decline in Oil Prices

The recent decline in crude oil prices to their lowest level in four years can be attributed to several key factors:

• The announcement of new tariffs by U.S. President Donald Trump;

• An increased likelihood of a global recession, which dampens demand for energy resources;

• OPEC+'s decision to accelerate oil production plans, a move that has shocked the markets and increased supply.

Consequences for Saudi Arabia's Economy

1. Rising Budget Deficit. The projected $67 billion deficit will compel the government to seek additional funding sources, including borrowing on international bond markets.

2. Reduction in Investment Plans. The kingdom’s economic ambitions, which involve multi-billion dollar projects aimed at diversifying the economy, may be jeopardized, necessitating a reassessment of budget priorities and spending reductions.

3. Support for Social Programs. Given financial constraints, the government might be forced to reconsider funding for social programs, which could lead to public dissatisfaction.

Factors Contributing to Budget Resilience

Despite the grim forecasts, several factors could help improve Saudi Arabia's financial situation:

• Economic Diversification. The "Vision 2030" program aims to reduce dependence on oil and develop non-petroleum sectors such as tourism and technology.

• Attracting Foreign Investment. Creating favorable conditions for foreign investors can enhance capital inflows and support economic growth.

• Increasing Tax Revenues. The introduction of new business taxes and a potential recovery in oil prices could boost budget revenues.

The current situation in the global energy markets exists in a context of high uncertainty. The decline in oil prices threatens Saudi Arabia's financial ambitions and requires the government to be flexible in budget management. Meanwhile, efforts toward economic diversification and attracting foreign investment could be crucial steps in ensuring long-term resilience.