Saudi Arabia Weighs $8 Billion Loan Amid Economic Pressure

By Staff, Agencies

Saudi Arabia is considering a new multibillion-dollar bank loan as the kingdom faces mounting economic pressure from the ongoing war on Iran, Bloomberg reported on Friday, citing people familiar with the matter.

The kingdom's National Debt Management Center has approached banks over a potential loan worth at least $8 billion, while Saudi Aramco is separately holding discussions with lenders over possible financing. Both talks remain preliminary and may not result in transactions.

The financing push comes as Riyadh faces war-related disruptions, weaker domestic economic activity and continued spending commitments linked to Crown Prince Mohammed bin Salman's economic diversification agenda.

Saudi Arabia and other Gulf states have also faced higher transport and import costs as fighting disrupts shipping through the Strait of Hormuz and puts additional pressure on regional supply chains.

Saudi energy infrastructure has come under retaliatory Iranian attacks, while operations by Yemen's Armed Forces in the Red Sea have complicated Riyadh's efforts to reroute crude exports through ports on the kingdom's western coast.

The pressures contributed to a sharp economic contraction in the second quarter, with Saudi Arabia's oil sector shrinking by nearly 25%, the country's deepest contraction since the COVID-19 pandemic.

The government also recorded a quarterly budget deficit of 34.3 billion riyals, or around $9.1 billion.

Higher crude prices have provided some relief, however, with Brent averaging around $87 per barrel this year and supporting Saudi oil revenues despite disruptions to production and trade.